IRS Scrutiny of Major Corporations at 20-Year Low

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.


According to a new report of the Transactional Records Access Clearinghouse, the I.R.S. has seen “a historic collapse in audits,” particularly of major corporations, which are being examined less frequently now than at any point in the last 20 years.

In my 2006 interview with tax reporter and author David Cay Johnston, we discussed the I.R.S.’s decreasing ability to bust up the tax dodges of corporations and the superrich. (We also discussed how the tax code is rigged to favor the wealthy and bilk the poor.)

An excerpt, after the jump.

MJ: You mention in [your book, Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—And Cheat Everybody Else] that Congress has handcuffed the IRS to keep it from investigating tax loopholes used by what you call the “political donor class.” But you also mention that the IRS misappropriates its resources, frequently auditing people, often the poor, who try to stretch their tax deductions by some small amount.

DCJ: The bad actor here is Congress. Congress is supposed to fund the IRS, and it has been steadily reducing the number of auditors and tax collectors the IRS has at the very time that the tax system has become vastly more complicated. And of course the country continues to grow, so there’s an increasing number of tax returns coming in. The IRS responds by doing exactly what Congress expects of them. That shouldn’t surprise anyone. All bureaucracies do what they are told.

MJ: There are some pretty scandalous examples in your book of the IRS’ inability to go after tax cheats. For example, some people took out a full page newspaper ad broadcasting the fact that they didn’t believe in filing taxes, and hadn’t done so, and nothing happened.

DCJ: Eventually, after I wrote seventeen articles in the Times and sat in the IRS Commissioners office and had sharp words with him, they finally started indicting those people. They have tried eight people, so far, and they got convictions for all but one. But it took years of relentless coverage.

If someone ran an article on the front page of the morning newspaper saying, “Here are the addresses of the ten biggest drug dealers in city,” you can confidently know that the police are on their way to, at the minimum, roust these people. But the IRS did nothing in response to the initial report in which I gave them a roadmap to these people. And that’s because they pick almost all their investigative targets based on what the computer tells them. So if you don’t file a tax return, or you file one that appears to be normal—you say you made $90,000 and you have normal sorts of deductions, when in fact you made $50 million—the computer won’t identify you.

Read the full Q&A here.

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

payment methods

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate