2008-07-06
On May 30, 2008, the Treasury Inspector General For Tax Administration published a report recommending that the IRS better focus its resources on international transactions of small businesses. The Treasury Department found that tax returns of small businesses were far less likely to be examined by the IRS, even when significant dollars were involved in the transactions.
The report noted that the compliance risk associated with international transactions continues to grow as companies expand operations across international boundaries, and that a significant number of high-risk international tax issues that should be scrutinized for examination are missed.
In response, the IRS stated that plans are underway to improve the way in which small business tax returns with international features are identified and selected for examination. The IRS is developing plans to use international examination specialists in the screening process and to ensure that specialists are involved in determining the scope and depth of examinations with international features.