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.