Acting IRS chief: No targeting small businesses in audits

Rep. Sam Graves (R-Mo.), the chairman of the Small Business panel, said in his opening statement that the IRS had been more aggressively auditing smaller companies as it tries to bridge the hundreds of billions of dollars the government is owed but does not collect.

{mosads}“We must ensure that all taxpayers, including small businesses, are treated fairly,” Graves said. “Who decides which small businesses are selected? How is the criteria developed? When does it change?”

Graves sent a letter pressing Werfel on those matters in late May, which the IRS responded to on Tuesday. That letter said that automated programs helped select audit candidates, and that 1.3 percent of small businesses were audited in fiscal 2012.

Republicans on the small business panel also questioned Werfel over whether the IRS was capable enough to implement its part of the Democratic healthcare overhaul and whether the interim leader could correct the problems that led to the targeting.

“You have stepped into a big mess here,” said Rep. Tom Rice (R-S.C.). “I sure hope you’re a good manager.”

Werfel said at the hearing that, according to the IRS’s numbers, the number of small business audits had stayed relatively stable in recent years. Rep. Nydia Velázquez (N.Y.), the top Democrat on the panel, told Werfel the agency needed to do a better job publicizing that figure.

“Otherwise, you’re going to be hammered constantly. The constant comment is that IRS goes after small businesses because we need to close that gap,” Velázquez said. “That is what is out there. That is the perception. And time and again, that’s what people hear.”