TAX FILE: Spotlight on S Corps

Internal Revenue Service officials announced on July 25 that they were launching a study of tax reporting compliance by S corporations. Audits of 5,000 randomly selected S-corp returns from tax years 2003 and 2004 will begin later this year. The IRS called this “research program” a “complement” to the study of individual tax reporting compliance completed in 2004. Some taxpayers had feared that this program would be a revival of the so-called “audits from Hell” conducted in the 1980s, but the 2002-2004 study proved to be much less intrusive.