Interesting SU findings on IRS audits

(Martin J. Whitman School of Management)

The Syracuse Post-Standard / Syracuse.com reports on some interesting findings from a research center at Syracuse University's Martin J. Whitman School of Management. The Transactional Records Access Clearinghouse found that IRS audits of large corporations (assets greater than $250 million) are down from a 64% audit rate in 1988 to a 26% rate in fiscal year 2007. The numbers were calculated based on IRS files obtained through the Freedom of Information Act.

The report found that while audits of large corporations have decreased, audits of smaller corporations have increased. The report warned that this could be a problem, because audits of large companies can collect more money for the government than large companies. The IRS did not deny the numbers, but disagreed with the analysis, saying that although audits for large companies are down, the collections from such audits have increased. It said audits of large corporations were down because IRS agents are meeting with the companies before taxes are filed. The idea is to come to an agreement beforehand, eliminating the need to go back an do an audit.

Researchers at Whitman responded with convincing statistics: of the smaller corporations, 34% of audits recommended no change in tax collections. Meanwhile, of the larger corporations, only 4% of audits recommended no change in tax collections in 2007.

This is something that Congress and the media should look into further. With the IRS making tax agreements instead of conducting audits, it sounds like the perfect opportunity for political favors. As a student journalist, I try to remain objective, but it has already been proven that political favors have run rampant in the Bush administration. The oil companies helped determine the nation's energy policy with Dick Cheney, and Halliburton was essentially handed the majority of on the ground defense contracts in Iraq and Afghanistan, no questions asked (only to later find that the company had overcharged the government millions while building substandard facilities).

It would be interesting to share the report with professors and students at Syracuse University's S.I. Newhouse School of Public Communications, and the Maxwell School of Citizenship and Public Affairs (ranked number 1 in the US for public affairs since 1995). That way scholars of policy as well as aspiring journalists could investigate further the potential connections between politics and corporate tax collection.