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As IRS audits waned, big businesses racked up unapproved tax breaks
Business
As IRS audits waned, big businesses racked up unapproved tax breaks
Corporations have claimed more ‘uncertain’ tax breaks in recent years, as IRS budget cuts have weakened the government’s ability to challenge them
By Douglas MacMillan and Kevin Schaul
July 14 at 4:00 PM
Federal audits of corporate tax returns have plunged in recent years, letting big companies claim elaborate tax breaks with less government scrutiny, according to a Washington Post analysis of company filings.
Accounting rules permit businesses to claim tax breaks even if they are likely to be overturned by tax authorities, legal experts said. In the past, the Internal Revenue Service audited virtually every tax return filed by large corporations and rejected tax breaks it deemed inappropriate, data show.
But during the Obama administration, congressional Republicans moved to slash the IRS budget, shrinking the agency’s staff and straining its ability to conduct audits. As a result, the federal government now examines just half of all large company tax returns, despite businesses claiming increasing tax benefits over this period that they say could be overturned by authorities, according to regulatory filings, interviews with tax policy experts and data from the IRS and financial researcher Calcbench.
Companies currently in the S&P 500 index had $235 billion in tax breaks awaiting audit at the end of last year, up 43 percent from a decade earlier, data show. These tax breaks, defined by companies as “unrecognized” or “uncertain” tax benefits, include deductions that companies see as unlikely to be approved by authorities because they rely on disputable interpretations of the tax code, experts said.
{snip}
About this story
Data on unrecognized tax benefits was provided by Calcbench. Included were 467 S&P 500 companies that had disclosed their 2020 data by mid-June.
The IRS examination rate is an analysis of IRS data based on a previous analysis by the Congressional Budget Office. The value charted is the number of examinations closed in a given fiscal year divided by the number of returns filed in the prior calendar year.
https://twitter.com/dmac1
https://twitter.com/dmac1
As IRS audits waned, big businesses racked up unapproved tax breaks
Corporations have claimed more ‘uncertain’ tax breaks in recent years, as IRS budget cuts have weakened the government’s ability to challenge them
By Douglas MacMillan and Kevin Schaul
July 14 at 4:00 PM
Federal audits of corporate tax returns have plunged in recent years, letting big companies claim elaborate tax breaks with less government scrutiny, according to a Washington Post analysis of company filings.
Accounting rules permit businesses to claim tax breaks even if they are likely to be overturned by tax authorities, legal experts said. In the past, the Internal Revenue Service audited virtually every tax return filed by large corporations and rejected tax breaks it deemed inappropriate, data show.
But during the Obama administration, congressional Republicans moved to slash the IRS budget, shrinking the agency’s staff and straining its ability to conduct audits. As a result, the federal government now examines just half of all large company tax returns, despite businesses claiming increasing tax benefits over this period that they say could be overturned by authorities, according to regulatory filings, interviews with tax policy experts and data from the IRS and financial researcher Calcbench.
Companies currently in the S&P 500 index had $235 billion in tax breaks awaiting audit at the end of last year, up 43 percent from a decade earlier, data show. These tax breaks, defined by companies as “unrecognized” or “uncertain” tax benefits, include deductions that companies see as unlikely to be approved by authorities because they rely on disputable interpretations of the tax code, experts said.
{snip}
About this story
Data on unrecognized tax benefits was provided by Calcbench. Included were 467 S&P 500 companies that had disclosed their 2020 data by mid-June.
The IRS examination rate is an analysis of IRS data based on a previous analysis by the Congressional Budget Office. The value charted is the number of examinations closed in a given fiscal year divided by the number of returns filed in the prior calendar year.
https://twitter.com/dmac1
https://twitter.com/dmac1
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