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    How to Improve IRS Audit Process: Example Problem

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    Every year federal income tax evasion resulted in a loss of approximately at least $300 billion and unpaid federal income and payroll taxes, estimated to exceed $120 billion. How would you suggest to IRS commissioner to improve the IRS's audit process and collection of unpaid taxes.

    Provide references.

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    Solution Preview

    If we take the IRS stand on the subject and believe the figures of a $300 billion dollar loss, steps that can be taken to improve audits and collections might be:

    1. Ensure compliance of non "under the table" payments of wages by conducting spot audits on businesses with Federal Tax ID numbers. Use computer modeling to compare size of the business with number of employees, etc.

    2. Match wages paid on Business tax returns (deduction) with quarterly 941 and yearly 940 payments. This should be an easy computer fix.

    3. Use ...

    Solution Summary

    This solution discusses how to improve the IRS.