Last week we wrote about how some returns are still more likely than others to be audited, even as the overall number of audits goes down.
In today’s post, we will follow up on that story by taking note of the decline in business audits.
Audits of business, like audits of individuals, are decreasing in numbers. In Fiscal Year 2014, the IRS audited the federal tax returns of slightly more than 57,000 businesses. That was the fewest business audits since before President Obama took office.
The percentage of companies that had their returns audited has also been decreasing. It hasn’t been so low since George W. Bush was starting his second term.
For large corporations (those with assets of at least $10 million), the audit rate is the lowest it’s been in a decade. The same is true of the rate for individual taxpayers, as the IRS struggles with budget cuts that have affected its capacity to conduct audits.
This does not mean, however, that either individuals or businesses should let their guard down when it comes to tax compliance. For example, the IRS sometimes goes after small business it suspects of underreporting their income. We discussed that issue in our November 26 post in 2013.
Whether or not the IRS will get more resources anytime soon remains very much up in the political air. The Obama administration has asked for an additional $2 billion in funding for the agency.
But with both houses of Congress in Republican hands, passage of that increase is probably not a likely prospect.
Source: USA Today, “IRS business audits drop,” Kevin McCoy, March 2, 2015