No Tears for ‘Audits From Hell’ : IRS calls an indefinite timeout for a practice damned by many
Taxpayers will love this action by the Internal Revenue Service. The agency has indefinitely postponed its dreaded, random “superaudits.” The program, aimed at sniffing out tax cheats, is being put off because of an anticipated IRS budget squeeze. No one likes the IRS but consider this: The 17% who manage to escape paying their full share of taxes add a $1,100 burden to each honest taxpayer.
If the IRS is turning away from superaudits--the so-called “audits from hell”--it is going to have to find some other method of tracking tax cheaters. The agency should consider using what are called targeted, focused and frequent compliance research studies, which would zero in on a smaller number of taxpayers with less exhaustive examinations but enough to show a pattern of taxpayer deceit.
The agency conducted 25 superaudit programs over the last 30 years, the last in 1988. The superaudits help compile a detailed inquiry into the cheating patterns of individual taxpayers. The data is useful in helping the IRS program its computers to search for tax cheaters. The next line-by-line superaudits were to have begun in December and involve the 1994 returns of 153,000 randomly chosen individuals and businesses.
Indefinitely postponing these audits will mean a saving of $1.4 billion for the IRS. The agency took the action in anticipation of a cut in its funding--the House-Senate conference committee is considering a bill that would slash the IRS budget to $7.4 billion from $8.2 billion.
The superaudits have been helpful in the past in unearthing tax scams, such as false claims for dependent children. In the late 1980s the IRS began requiring Social Security numbers for each claimed dependent child. The following year, the number of children claimed dropped by 7 million.
But the audits have been roundly criticized by victims and even some within the IRS as onerous, time-consuming and not the best way to track tax noncompliance. Officials have indicated that they are looking at alternative methods to ferret out actual and likely tax cheaters. Besides reducing the number of superaudits, one way would be to beef up the regular IRS audits.
