IRS Goes Easier on Biggest Corporations

When called on the facts that they're conducting fewer audits of large companies (assets over $250 million), and spending less time when they do, the IRS disagrees that it's giving the big boys a break.

The facts, contained in a new TRAC report and covered in the NY Times and elsewhere, are that the IRS has reduced the time spent on each audit by 21 percent in the last five years, to 958 hours from 1,210 hours. At the same time, the number of actual audits, which had increased in the last two years, has fallen back to the level of 2002.

(Keep in mind that companies of this size, while filing only 0.2% of all corporate returns, control 90% of all corporate assets and receive 87% of all corporate income, according to data from an earlier TRAC report.)

The IRS responds that they're just leaner and meaner:

IRS spokesman Terry Lemons said the agency strongly disagreed with TRAC's conclusion that the biggest corporations were getting off easy. "Large corporations are not getting easier treatment," he said. "They are hearing more often from us and getting bigger tax bills."

He said that, between 2002 and 2006, the recommended levy per return for audits of corporations with assets of $250 million and up had gone from $3.65 million to just under $6 million.

Now, it's plausible that the IRS is enforcing the tax laws more effectively, and that's why they are able to increase the total tax collected from big companies with less auditing. (The IRS says that $48.7 billion in enforcement revenue was collected in fiscal 2006, up from $47.3 billion the previous year, a 3% increase.) But that's not the only possible explanation.

It might also be that more big companies are just plain cheating more. If they know it's less likely they'll be audited, and the audits that are conducted will be quicker and less thorough, then there's greater incentive to cheat. So perhaps there's a lot more tax cheating going on, and that 3% increase in tax revenues from these companies is just the easy-to-reach low-hanging fruit.

The big problem is that the IRS has stopped providing the information that would make it possible to know which of these scenarios is true.

Prof. Sue Long, a director of the Syracuse clearinghouse, said getting the data used in the research had been a problem. The I.R.S., Professor Long said, initially turned over a small number of pages of data in May after Judge Marsha Pechman of Federal District Court in Washington directed the I.R.S. to resume complying with a 1976 order to make the data available. Later, after she complained, the I.R.S. turned over much more data.

Professor Long said the data was a mess. "It took us months to sort it out," she said.

"They told us they had given us all of it, but we noticed from the page numbers in the upper right hand corner that they had not and it turned out they had given us less than 1 percent of the data" that the university researchers eventually received, Professor Long said.

In addition, she said, it is difficult to tell if the data is complete because the I.R.S. will not provide an inventory.

No administration enjoys having independent watchdogs look over their shoulder, but the level of secrecy and FOIA non-compliance by the Bush administration is unprecedented. The new Congress will likely be able to do little to improve the FOIA climate, that will have to wait until 2008. For now we see through a glass, darkly.

Supreme Court Rules For Immigrant Rights

This past Tuesday, the Supreme Court struck down a lower court ruling that would have made it much easier for the Administration to harass and deport legal immigrants. As reported in the NYT:

The Supreme Court rejected the government's interpretation of immigration law on Tuesday, ruling that a noncitizen is not subject to mandatory deportation for a drug crime that, while a felony in the state where the crime was prosecuted, is only a misdemeanor under federal law.

The 8-to-1 decision restored to one category of immigrants, caught in the nearly impenetrable maze where immigration law and criminal law meet, the ability to avoid automatic deportation and the other dire consequences of being guilty of an "aggravated felony."

Here's a reference for aggravated felony. But in a nutshell, under U.S. Immigration law, a legal immigrant can be deported for immigration violations, national security and terrorism activities, or criminal violations. With the Anti-Drug Abuse Act of 1988, Congress got specific about the kinds of crimes that would justify deportation by creating the concept of aggravated felony, which specifies as grounds for deportation murder, drug trafficking, and illegal trafficking in firearms and destructive devices.

The list of offenses that fall under the "aggravated felony" category was expanded several times, and include even some misdemeanor offenses. Results of an aggravated felony decision are severe, and include the following:

1. Ineligible to stop deportation. Many other deportable offenses allow a non-citizen to be able to apply for "waivers", or exceptions, to deportation. But no exceptions are available to aggravated felons.


2. Unable to apply for other legal immigration status. Many persons with other violations, including some criminal violations that make them deportable, remain eligible to apply for asylum, lawful permanent residence (green card), and other routes to legal status spelled out in the INA if they meet other qualifications. Aggravated felons are disqualified from almost every provision of the law that would enable them to legalize their status or to retain existing legal status, such as a green card.


3. Guaranteed to be detained. Aggravated felons, in addition to several other types of non-citizens, fall within the INA's "mandatory detention" provisions. This means that most will be detained until DHS is able to effect their deportation.


4. Less access to immigration court. For the most part, non-citizens can only be deported after an Immigration Judge conducts a hearing and signs an "order of removal (deportation)". However, the INA allows DHS to deport aggravated felons who are not green card holders "administratively", that is, within the agency without having to take the case before an Immigration Judge.


5. Less access to federal appeals courts. Aggravated felons are among a group of deportable non-citizens who have fewer legal rights to request a federal judge hear their case on appeal.


6. Permanent ejection from the US. Most non-citizens who are deported from the US are not eligible to apply to return legally to the country for a period of from five to 20 years depending on their circumstances. But aggravated felons are permanently disqualified from ever returning to the US for any reason.

The law does not apply to illegal immigrants, and it has not been used primarily against recent immigrants either. In fact, the median length of residence for individuals charged under this law has been 14 years. That means half the people charged have been legally living and working in the
United States for 14 years or more.

I'm particularly heartened by the lopsided decision. Lone dissenter Clarence Thomas basically stated that if Congress had meant for aggravated felony to only apply to felony offenses, it should have said so.