Despite the news from last week that the IRS is staffing up and hiring thousands of additional revenue agents and officers, there is new data out from the IRS that is a bit depressing. The Transactional Records Access Clearninghouse (TRAC) released a new report today that shows the IRS continues to do too little to audit financial services firms, particularly those with over $250 million in assets.

Last year, looking at the largest corporations with assets of $250 million or more, nearly two out of every three returns (64%) filed by large corporations outside of the financial services sector were audited by the IRS. In contrast, for the more than 10,000 of large financial services companies, only 15% of them were audited in FY 2008.

This is particularly strange because the financial services sector accounted for 75 percent of the tax returns filed by the largest corporations and 72 percent of all the assets owned by those large corporations.

Making matters worse, the IRS spent less time on each of the financial services company audits. From the new TRAC report:

When a financial services firm was audited, the thoroughness of the audit — measured by the average hours the auditor spent — also was very different. For example, focusing only on the largest companies audited — those with $20 billion or more in assets — the audit for companies not in the financial sector averaged 3,145 hours of direct examiner time. Despite the unique challenge of understanding derivatives and the like, however, the audits for financial services giants averaged 1,695 hours, about half the time the typical audit took for all behemoths

The Hill: Online hide and go seek

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