IRS Audits of Giant Corporations Nearly Halved Since 2010

Chris Gaetano
Published Date:
Apr 10, 2018

A recent report has found that even as the number of giant corporations with over $20 billion in assets has grown, the proportion of them subjected to IRS audits has nearly halved since 2010.

The report, which was published by the Transactional Records Access Clearinghouse at Syracuse University, noted that, eight years ago, there were 447 such corporations, and of those, the IRS audited 431, or 96.4 percent. Since then, though, the number of corporations with over $20 billion in assets began to steadily increase while, at the same time, IRS audits of these corporations began to steadily decrease. By the time we get to last year, there were 616 giant corporations and, of those, 331, a little more than half, were audited. Further, according to the report, when the IRS did conduct these audits, it spent nearly half as much time as it did eight years ago. Despite this reduction, these audits were able to turn up $10.4 billion in unpaid taxes; the report said this high amount implies that, were the IRS to conduct larger numbers of more thorough audits, it would have been able to recover even more revenue. 

This is not because the IRS suddenly got lazy on the job. The report said the main reason is actually lack of available staff, as Congress has repeatedly cut the IRS budget since 2010, which reduced the number of available auditors by 5,144. Fewer IRS auditors means fewer IRS audits. The decline in audits of large corporate entities, therefore, tracks with an overall decline in the number of audits the IRS is capable of conducting. The Wall Street Journal said that the IRS audited 4.7 percent of high-income taxpayers last year, a marked decline from the 9.55 percent rate in 2015, which itself marked a 10-year low in audits overall. 

At the same time, said the report, the IRS has also had more responsibilities than before, and so personnel have more demands on their time. This has meant that the IRS has had to make decisions on which areas to cut and by how much in order to meet these demands. 

"The end result is that in allocating the diminished number of revenue agents, these corporate giants have taken larger relative cuts. In fact, as mentioned earlier, the number of revenue agent staff years assigned to examine these corporate giants has fallen by half (49.2%) - considerably more than the drop over the same period of time in total revenue agents on IRS payrolls," said the report. 

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