IRS did a lot fewer audits last year, but the news isn’t as sunny as it may seem. While overall audits dropped in ‘08, for most groups the decrease was less than one percentage point. The only companies that saw any significant reduction in audits were large corporations (down 1.54% from ‘07 levels).

In fact, the audit rate for small companies actually went up a bit, from 0.92% in ‘07 to 0.95% in ‘08.

It won’t last

Unfortunately, the trend toward fewer audits isn’t likely to continue. IRS said the reason for the drop was that it had to reassign agents from audits to handle the influx of questions regarding the 2008 tax rebate program.

With that program all but over, the agents are expected to go back to their old tasks — auditing companies like yours.

Tags: Audits, Enforcement, IRS, Tax compliance