At the same time, though, the IRS approach to auditing is increasingly obsolete, according to the Transactional Records Access Clearinghouse at Syracuse University. The agency is continuing to focus on big manufacturing companies and other traditional businesses while auditing fewer than 20 percent of financial services companies.
Big financial companies represent only a small fraction of all corporate filings -- 0.2 percent -- but control 90 percent of all corporate assets and receive 87 percent of all corporate income, according to TRAC.
IRS Commissioner Mark W. Everson, left, argues that "service plus enforcement equals compliance."
(Robert A. Reeder -- The Washington Post)
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TRAC said yesterday it has filed suit against the IRS to force it to disclose more data about its collection work.
Former internal revenue commissioners and other tax experts this week also faulted the IRS's enforcement work. Referring to what they called "a crisis in U.S. tax enforcement," they said that if the tax gap is what the recent IRS research says it is, it means that 15 to 16 percent of the taxes owed go uncollected.
Former internal revenue commissioner Donald C. Alexander said a couple of Everson's recent predecessors had "bought into the notion" that service and information are the key to getting people to pay and that "an educated taxpayer will comply."
"Look at what we have today," he said.
"We have a crime wave on our hands," said Robert S. McIntyre, head of Citizens for Tax Justice, a group that advocates tougher laws and enforcement.
One criticism on which there is almost total agreement is that the tax laws are too complicated. "I fill out my return by hand every year," said U.S. Comptroller General David M. Walker. But it is a struggle, he said, and "I am a certified public accountant."
"Our tax laws are incredibly complex," he said.