Graphical Highlights - taxes

Audit Rates for Large Corporations with Assets of $250 Million or More

IRS Large and Mid-Size Business (LMSB)
Division Industry Areas
Fiscal Year Audit Rates** 3 Year
2002 2003 2004
Financial Services 7,898 16% 10% 17% 15%
Communication, Technology and Media 1,040 48% 60% 84% 64%
Retailers, Food, Healthcare and Pharmaceutical 820 78% 66% 99% 81%
Natural Resources and Construction 627 ~100% ~100% ~100% ~100%
Heavy Manufacturing and Transportation 592 ~100% ~100% ~100% ~100%
Total 11,193 32% 29% 38% 33%

Source: TRAC analyses based upon internal IRS tabulations, published IRS Statistics of Income spreadsheets, and IRS Databooks for FY 2002 - 2004.

* These figures are for returns filed during calendar year 2002. The industry grouping for an additional 216 returns was not known. Figures available for the other years showed slight variation from these 2002 numbers.

** Three-year average used to provide a more stable estimate since corporate audits can take more than a year to complete. The breakdown by industry sectors for the last six months of FY 2004 is estimated, based upon relative sector activity during the first six months.

Note: The highest income level for audit rates in IRS statistical publications is for corporations with assets of $250 million or more. But data developed by Statistics of Income, a specialized office within the IRS, indicate that in the financial services category there are 1,210 or more corporations that have assets of at least $2.5 billion. Assuming that all of the audits listed by the IRS in the financial services sector were aimed only at the supersized corporations, not even all of these supersized companies' returns would have been audited. If instead we assumed companies between $250 million and $2,500 million received some audit attention (even 4%) and all remaining audits were concentrated on the supersized companies, then the corresponding audit rates for the largest companies would still be less than the audit rates for the other sectors reported above.

Transactional Records Access Clearinghouse, Syracuse University
Copyright, 2005