Look to Audit Bottom Line, Says IRS


Experience from its expanded number of audits of corporate returns will allow the IRS to work smarter in the future, the agency said, as it acknowledged spending more time on audits that came up empty of additional tax. The IRS rebutted a report in April by a research organization associated with Syracuse University that showed the percentage of large corporations audited—those with assets of $250 million or more—declined to 35% in 2006 from 44% in 2005, as did additional tax recommended as a result ( http://trac.syr.edu/tracirs ). From 1996 to 2006, “nonproductive” audit hours more than tripled, said the research group, the Transactional Records Access Clearinghouse.

Audit-derived assessments, however, were up, the IRS said. Not only did the number of large corporate audits increase by 50% from fiscal 2003 to 2006, but revenues recommended from them doubled, from $13 billion to more than $26 billion.

“Any discussion about ‘no change rates’ is not complete without looking at the bottom line,” the IRS said, adding that even audits that don’t bring in more dollars can yield lessons for greater productivity by examiners going forward.

SPONSORED REPORT

How to make the most of a negotiation

Negotiators are made, not born. In this sponsored report, we cover strategies and tactics to help you head into 2017 ready to take on business deals, salary discussions and more.

VIDEO

Will the Affordable Care Act be repealed?

The results of the 2016 presidential election are likely to have a big impact on federal tax policy in the coming years. Eddie Adkins, CPA, a partner in the Washington National Tax Office at Grant Thornton, discusses what parts of the ACA might survive the repeal of most of the law.

QUIZ

News quiz: Scam email plagues tax professionals—again

Even as the IRS reported on success in reducing tax return identity theft in the 2016 season, the Service also warned tax professionals about yet another email phishing scam. See how much you know about recent news with this short quiz.