IRS Audits More SMBs, Fewer Large BusinessesIRS Audits More SMBs, Fewer Large Businesses

A Syracuse University government-monitoring organization has reported that the tax audit rates of large companies have plummeted, while those of small and midsize businesses are rising.The Transactional Records Access Clearinghouse cited a "historic collapse" in audits of corporations with assets of $250 million or more. About 27 percent of such corporations were audited in 2007, compared with 35 percent in 2006 and 44 percent in 2005.

Meanwhile, audit rates on small and midsize companes have increased. Since 2005, the audit rates for companies with $10 million to $50 million in assets have risen from 12.3 percent to 15 percent, while the rates for all segments with assets greater than $450 million have dropped. TRAC questioned the financial benefits of the shift, pointing out that the government retrieves only $682 in additional taxes per agent-hour spent on small businesses, compared with $7,498 per agent-hour spent on the largest corporations.

In defending his agency's practices, IRS Deputy Commissioner Barry Shott said that enforcement revenue from large companies rose by one-third in 2007 from the previous year. "What we are doing is focusing our resources better on where the noncompliance is," he said.Associated Press, USA Today