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January 2007 — Vol. 84, No. 11

SMALL BUSINESS

IRS audits more S corporations, partnerships

 

Stepped-up enforcement efforts by the Internal Revenue Service produced a record $48.7 billion in enforcement revenues in fiscal year 2006, according to IRS Commissioner Mark W. Everson.

“We saw an increase in our efforts to review S corporations and partnerships while our other activity involving small business and large corporations remained relatively stable,” he said. The agency, he added, placed more emphasis in the growing area of flow-through returns involving S corporations and partnerships:

  • Audits of S corporation returns increased 34%, to 13,984 from 10,417. This is the highest level since 2000.

  • For partnerships, audits increased 15%, to 9,777 from 8,489. This category is at the highest level since 1998.

  • Audits of small businesses organized as corporations remained about the same. In 2006, 17,871 audits were completed, up slightly from 17,858 in 2005. Both of these figures are more than double the 7,294 audits of small businesses in 2004.

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