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IRS says U.S. corporate tax audits down sharply after budget cuts

NEW YORK (Reuters) – Federal tax audits for U.S. businesses were down 6 percent in the last fiscal year, ended on Sept. 30, falling to their lowest level in eight years as the Internal Revenue Service faced budget cutbacks and a decline in enforcement staff, IRS Commissioner John Koskinen said in a statement on Monday.

The IRS examined just 57,211 business returns last year, down from 61,020 in 2013 and 70,265 in 2012, according to data released by the agency.

“As with individual audit rates, we continue to see steep declines in corporate examinations as the IRS budget has declined during the last five years,” Koskinen said.

Audits for large corporations with more than $10 million in assets were down by 20 percent and are now at their lowest level in a decade, Koskinen said.

Only about 12.2 percent of companies in that category were audited last year, down from 16.6 percent in 2010.

Over the last five years, IRS funding has fallen by more than $1.2 billion, or 7 percent, to about $11.3 billion, while the number of revenue agents dropped by over 16 percent to 11,629, according to data released by the agency.

Under the Obama administration’s 2016 budget request, the IRS would receive an additional $2 billion.

“This would help the IRS stop this decline in enforcement efforts and help improve critical taxpayer services,” Koskinen said.

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