GAO: IRS Audits Too Many Low-Income Businesses

Posted on Jan 31, 2013

A recent study by the Government Accounting Office (GAO) has taken the IRS to task for auditing too many low-income businesses and individuals, while letting larger tax cheats slip through its fingers. According to a Reuters story, the GAO was asked to study the audit issue after 2006, when there was a whopping $450 billion gap between the taxes owed by U.S. businesses and citizens and the actual taxes paid.

Seven years later, here is what the GAO found: if the IRS had audited more individuals with net incomes above $200,000 in 2007 and 2008, it could have collected an additional $1 billion in taxes in each of those calendar years. The GAO also takes the IRS to task for performing too many face-to-face, or “field,” audits, as opposed to less costly “correspondence” audits which are conducted by snail mail or email. (Oddly enough, Reuters notes, the official IRS ombudsman, Nina Olson, has criticized these same correspondence audits for limiting the interplay between taxpayers and revenue officers.)

How has the IRS responded to the GAO's findings? An official would say only that the proposed changes in the audit process would take “years, and not months” to implement; yet another example of how slowly a massive bureaucracy like the IRS moves, even when there is good reason to implement immediate changes.

Are you an Oklahoma taxpayer who has been sent a whopping back tax bill by the IRS? Call the Oklahoma tax experts at Travis W. Watkins, PC (800-721-7054) to find out what we can do for you!

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