The IRS is planning to expand its comprehensive employment tax audit program. Hurray…
The process began last year, when they conducted the first batch of payroll tax examinations to fine-tune its return selection formulas and calculate the portion of the tax gap attributable to payroll tax noncompliance.
The IRS plans to do about 2,200 exams a year over a three-year period. But Treasury inspectors say the number of examinations of large and international businesses in each audit sample will be slightly more than 2% of total audits. This is not enough to accurately measure compliance in this sector. IRS agreed that more exams may be necessary after the three-year study is done. The basis will be based upon additional taxes collected. Remember the IRS is a business and they spend money based upon returns of investments for all audits.