From face-to-face audits to criminal and civil penalties, tax law enforcement by the Internal Revenue Service last year continued its slide, according to new data that question recent Bush administration claims of a more vigilant IRS.
The data, compiled by Syracuse University's Transactional Records Access Clearinghouse, singled out deficiencies in business tax auditing and enforcement. But even on individual tax returns, the IRS's boasts of a clampdown may be inflated, university researchers say.
IRS chief Mark W. Everson predicts a turnaround in audits of companies.
(Stephen J. Carrera -- AP)
"The rhetoric is very different from the reality," said David Burnham, co-director of the clearinghouse, which tracks a variety of federal law enforcement statistics.
IRS officials sharply disputed the assertion that administration officials have overstated efforts to put the tax cop back on the beat.
"Our basic message is, we've arrested the decline in enforcement that started in the '90s," said IRS Commissioner Mark W. Everson. "We will start to bring the numbers up rather dramatically. I think we have a responsible, rather aggressive program here."
But the IRS did not dispute the data, which it supplies annually to the Syracuse clearinghouse. And those statistics indicate that tax scofflaws still have little to fear.
Only 0.73 percent of business tax returns were audited in the fiscal year that ended Sept. 30, down from 0.88 percent in the previous year, TRAC found. In 1997, 2.62 percent of business tax filers could expect to be audited.
There was also a dramatic slide for corporations with assets of at least $250 million. Among those, audit rates slid to 28.98 percent last year from 33.68 percent in 2002. In 1995, more than half of such companies were audited.
From 1999 to 2003, the number of civil negligence penalties aimed at corporations fell to 12 from 62. Civil fraud penalties dropped to 170 last year from 247 in 1999. Tax prosecutions fell last year to 538, from 563 in 2002. Ten years ago, the IRS and Justice Department prosecuted more than 1,000 cases.
This is hardly the picture the IRS has been trying to paint as tax deadlines approach this week. As recently as Tuesday, Everson traveled to the Justice Department to proclaim that tax cheaters should beware, and he handed out a list of jailed offenders to prove it.