As Treasury Inspector General for Tax Administration (TIGTA) Russell George put it in a report this past July, “the agency is spending a significant amount of resources on unproductive audits and burdening compliant taxpayers with unnecessary audits.” Furthermore, IRS statistics reveal that under the Obama Administration freelancers and the self-employed are increasingly targeted for auditing. Indeed, chances of a Schedule C being audited are twice as great as a corporation getting audited. Three percent of small businesses under Schedule C got audited, compared with one percent of corporations.
Since small business owners are more likely than large corporations to represent themselves when challenged in court by the IRS, the aggressive auditing adds pressure and costs that are harder for small operators to absorb. That means more time spent battling the IRS and less time growing a business and creating jobs. Given that only three percent of all tax issues examined result from deliberate or intentional failures to report income, such scrutiny seems misplaced and unwarranted.
Even as the IRS has ramped up audits on America’s job creators, it has increasingly turned a blind eye to policing stimulus-related checks to low-income individuals seeking tax credits.