Corporate Tax Prosecutions Down; Feds Predict Rise

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An independent analysis of Internal Revenue Service data shows that tax enforcement has fallen steadily under President Bush, with fewer audits, fewer penalties, fewer prosecutions, and virtually no effort to prosecute corporate tax crimes, the New York Times reports. The audit rate for the 11,200 largest corporations, which pay nearly all corporate income taxes, has fallen by almost half over the last decade. David Burnham of the Syracuse University organization that reviewed the data said that “President Bush and the I.R.S. commissioner have been running around talking about how they are going after corporate scofflaws, but the I.R.S. data suggest that the effort against corporate scofflaws is continuing to decline.”

The I.R.S. has about half the law enforcement resources for each tax return that it did in 1988, the Syracuse researchers said. The university’s Transactional Records Access Clearinghouse will post the data at trac.syr.edu.

In the 15-month period that ended on Dec. 31, 2003, convictions were obtained against six corporate officers in five cases in which the I.R.S. was the lead agency. That was barely more than one-half of 1 percent of such cases, indicating that the law enforcement focus remains on individuals. Justice Department data show a long trend down in tax prosecutions. Rod J. Rosenstein, who supervises such cases, said that in 2003, the number of investigations and criminal tax charges both rose for the first time in years: “It often takes two years or more for a criminal tax defendant to be convicted and sentenced, so the increase in new cases is not yet reflected in completed prosecutions.”

Link: http://www.nytimes.com/2004/04/12/business/12irs.html?hp

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