Treasury Inspector General for Tax Administration
August 12, 2010
TIGTA - 2010-42
Contact: Karen Kraushaar
WASHINGTON - Between January 2005 and December 2009, the number of corporate returns processed annually by the Internal Revenue Service fell seven percent, from almost 2.2 million to approximately two million, according to a new report released publicly today by the Treasury Inspector General for Tax Administration.
The report, "Filing Characteristics and Examination Results for Small Business Corporate Returns," analyzed IRS data for Fiscal Years 2005 through 2009 to identify trends in the filings and audits of conventional small business corporate returns.
One factor that may be contributing to the modest decline in corporate return filings is the popularity of organizing a business as a partnership or subchapter S corporation, which allows the partners and shareholders of these entities to avoid double taxation on business profits.
According to the IRS, the number of partnerships is expected to increase by 49 percent and the number of subchapter S corporation filings is expected to increase by 39 percent between 2006 and 2015.
"This audit was part of TIGTA's 2010 Annual Audit Plan to highlight the important role a National Research Program study could have in understanding what the filings and audits of corporate returns mean for tax compliance," said J. Russell George, Treasury Inspector General for Tax Administration. "If approved and implemented, the National Research Program study would evaluate the extent to which corporations and their shareholders comply with the tax laws," he added.
TIGTA did not make any recommendations in this audit and the IRS did not provide any comments in response to a draft of this audit.
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