Not that we needed confirmation, but experts and former long-time employees of the Internal Revenue Service admit that small and medium-sized businesses are routinely and "disproportionately" targeted by the department for audit.
The audits, which experts say are "not random," often neglect large corporations with the means to handle the financial burdens associated with an audit. It's the little guy, as always, who is put through the ringer.
The Free Beacon reports on the details revealed during a Small Business Committee hearing held on Wednesday:
Donald Williamson, executive director of the Kogod Tax Policy Center at American University, says the IRS does this because small businesses receive most of their income in cash, which can be difficult to identify and report.
Even though the IRS can collect more money by auditing large corporations, the IRS continues to audit small and medium size businesses at a high rate.
“The highest number of audits for 2014 of individual tax returns with business income was in the lowest range of business returns, i.e. $200,000 to $400,000, amounting to 50 percent of all audits of upper income individual returns,” Williamson said. “Indeed, the chances of a Schedule C being audited are almost twice as great as a small corporation being audited.”
In addition to admitting that "most audits are not random," Williamson said the IRS employs a "secret algorithm for determining how likely each taxpayer is to have unreported income."
According to Williamson, the IRS concluded through the use of this algorithm that small businesses are "less likely to be paying their fair share of taxes." If so, perhaps that is because they are burdened with one of the highest tax rates in the free world and subject to restrictions, regulations, and other high costs associated with doing business in an "unfriendly" climate.
If a small business, in today's day and age, is taking in even just a few hundred thousand in revenue, that that may seem like a lot but it isn't. After overhead, payroll, insurance fees, various licensing fees if applicable, paying for employees health insurance if applicable, and of course, grotesquely high taxes, it's a wonder any small business today can even remain afloat.
Then they are preyed upon by the IRS. Because when an audit is issued, a small or mid-size company often does not have the financial or personnel resources to properly deal with the audit.
"In many cases, small businesses simply cannot afford to hire a professional to deal with the demands of an audit," said chairman of the hearing Rep. Steve Chabot (R., Ohio).
The demands of an audit are apparent to anyone who's gone through one, and that is precisely why the IRS is targeting those least capable of meeting that demand.
Chabot added that the IRS "has failed repeatedly in meeting this obligation to the people it is supposed to be serving." ... and isn't that often the case when it comes to big government?




