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IRS business audits drop

IRS business audits drop

IRS audits of U.S. businesses plunged to the lowest level in eight years during 2014 as the nation’s tax agency experienced budget and enforcement staffing declines. Continuing a push for budget hikes, the IRS said Monday that just over 57,000 companies underwent audits of their federal tax returns during fiscal year 2014. The total represents the lowest number since 2006, new data issued by the agency shows.635608998435988030-AP-IRS-Audits

The business audit rate, the percentage of returns examined by IRS examiners, dropped to 0.57%, the data shows. The examination rate hasn’t been that low since fiscal year 2005, the data shows. Some of the largest declines occurred among large corporations with assets of $10 million or more. IRS data showed audits of those firms dropped to just over 7,800 in 2014, marking a more than 20% one-year fall and the lowest total in at least a decade.

The fiscal year 2014 audit rate for large corporations was 12.23%, the lowest percentage in more than a decade, the data shows. Similarly, just over 17,000 U.S. companies with assets of less than $10 million underwent IRS audits in 2014, the data shows. That represents the lowest total in at least a decade. However, last year’s 0.95% audit rate for the smaller firms was virtually unchanged from fiscal year 2013 and slightly lower than prior years during the last decade, the data shows.

The business audit declines are part of a trend that has also seen a drop in IRS examination of tax returns submitted by individual filers. The chances that an individual U.S. taxpayer could face an audit dropped to the lowest level in a decade last year and are expected to fall even further this year, the IRS said last week. The IRS’ combined in-person and correspondence audit rate for individuals fell to 0.86% last year, the lowest percentage since at least fiscal year 2005, the data shows.

IRS officials have repeatedly noted that the declines have occurred amid congressional trimming of the tax agency’s budget and departures in compliance employees who conduct audits. The tax agency’s budget has dropped more than $1.2 billion in the last five years, IRS Commissioner John Koskinen said in a statement issued with Monday’s data.

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