IRS Focus On Audits At Firms Criticized; Work Has Not Improved Tax Collection
IRS agents are devoting more time to corporate audits that fail to find additional tax dollars, an analysis of federal records released yesterday shows.</br></br>As a result, an increasing share of underreported taxes identified by the government comes from individuals, according to the analysis by the Transactional Records Access Clearinghouse, a nonpartisan research group at Syracuse University.</br></br>TRAC said the results raise concerns that the IRS isn't using its limited resources to collect taxes in the fairest and most efficient manner. The analysis comes as Congress and the president grapple with how to close the $350 billion tax gap -- the government's estimate of unreported or uncollected federal taxes -- in the face of rising expenses, particularly from the war in Iraq.</br></br>"You would not expect what we found if the system were running well," said Susan B. Long, a TRAC researcher who is a professor of statistics at Syracuse's business school.</br></br>IRS spokesman Terry Lemons said TRAC's numbers are accurate but that the drop in productivity is the temporary result of a policy change in 2003, when Mark W. Everson became IRS commissioner. The new policy, intended to improve tax collection, shifted auditing time from larger companies to smaller firms and required agents to finish corporate audits more quickly, in part by asking fewer questions.