Disparity in IRS audits, report says

By Mary Dalrymple
Associated Press

WASHINGTON — The Internal Revenue Service audits far fewer of the biggest financial service companies — banks, brokerages, accountants, lenders and others — than it does other large corporations, according to an analysis of government data.

The IRS disputed the findings by Syracuse University's Transactional Records Access Clearinghouse and emphasized that the agency audits returns with a high risk of tax evasion, regardless of the industry.

"The conclusions drawn by the TRAC analysis are not accurate," said Deborah Nolan, IRS commissioner for the large and midsize business division.

Using information provided by the IRS, the researchers measured disparities in audit rates of corporations with $250 million or more in assets. The report, being released today, found that about 15 percent of financial services companies were audited between 2002 and 2004. In contrast, almost every corporation in agriculture, mining, construction, heavy machinery and transportation was audited.

"The very low attention being given to the financial sector by the IRS is particularly surprising in light of the leading role this industry plays in the country's economy," researchers said.

More than three in five communications, technology and media companies were audited. The rate was about four in five for retail, food, pharmaceutical and healthcare businesses.