IRS enforcement efforts increased again in fiscal year 2007, focusing on “riskier” businesses and wealthy individuals, according to its Fiscal Year 2007 Enforcement and Services Results.  For instance, compared to 2006 audits, last year the IRS audited 84% more returns of individuals with incomes of $1 million.  “In the business arena, the IRS continued efforts to review more returns of flow-through entities—partnerships and S Corporations,” the study says, an area where it perceives “growth and potential risk.”   While large corporate audits are down slightly, “we have increased our focus on mid-market corporations—those with assets between $10 million and $50 million dollars.”  Other enforcement highlights:

• Audits of S Corps increased to 17,681 during 2007, up 26% from the 2006 total of 13,984.
• Audits of partnerships increased to 12,195 during 2007, up almost 25% from last year.
• Audits of mid-market corporations increased to 4,473, up 6% from last year.
• Audits of businesses in general rose to 59,516, an increase of almost 14% from the prior year’s total of 52,223.
• Although the audits of large corporations dipped slightly in 2007 to 9,644 audits, the number of audits is up 14 percent from the fiscal year 2002 level.

For access to the full report, click here.