An IRS audit is one of those rain day events you hope never comes. For many taxpayers that get audited, a common question is why doesn’t the IRS go after bigger corporation that have all the money?

IRS Auditing Big Corporations Less?

It is a common refrain you hear time and again. Why does the IRS pick on the little guys when multi-national businesses are making tons of money and undoubtedly skimming on their taxes? This refrain sounds logical at first glance, but the devil is in the details as they like to say.

Large corporations do file taxes. In fact, they carry a heavy burden in doing so. A functioning, large corporation [think Microsoft or General Motors] is just as overwhelmed by the tax code as you are. One of the large entities, I believe General Motors, did a study that revealed it had to file one tax form or another every 3 minutes of the business week just to stay in compliance with the various tax regulations.

Does this mean we should through some sympathy towards large corporations and their tax problems? Maybe or maybe not, but it does point out one interesting thing. With so many filings and such a complex tax code, most huge corporations are undoubtedly making errors when complying with the tax regulations. In some cases, it may be intention. In most case, however, it is probably a situation of human error and simply be overwhelmed with the sheer volume of work that has to be done.

So, does the IRS audit large corporations as aggressively as it does you and me? It is hard to say. What is clear is the agency is doing less audits than in past years and is spending less time on them. A recent study by the Transaction Records Access Clearinghouse at Syracuse University found the IRS audit rate of large corporations dropped nearly 10 percent this year and the time spent on the audit also dropped.

Does this mean the IRS is giving the big boys a free ride or at least less bumpy one? Not really. The IRS still audited 35.5 percent of all businesses with over $250 million in assets. Think about that for a second. The big boys stand a 1 in 3 chance of being audited. In comparison, individual taxpayers stand a 2 in 100 chance. Given these ratios, it is fairly difficult to argue big business is getting a break.

Richard A. Chapo is with BusinessTaxRecovery.com – providing information on tax debt relief.

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