National Research Program.

• Author: Laffie, Lesli S.
• Position: FROM THE IRS

IRS examiners selected nearly 90% of 46,007 cases for face-to-face audits in the first phase of its National Research Program (NRP), despite hopes that it could handle more cases less intrusively.

Background: The NRP was instituted to help the Service isolate problem compliance areas, so that it could better target its enforcement efforts. It replaces the highly controversial Taxpayer Compliance Measurement Program (TCMP), which eventually was terminated amid cost overruns and taxpayer complaints of intrusiveness.

The IRS chose 1,817 tax returns (3.9%) for correspondence audits, while only 2,535 returns (5.5%) were accepted as accurate. Of the remaining returns, 0.9% (402) were accepted with an adjustment, while 0.4% (186) had been previously audited.

Audit reasons: The Service initially estimated that a larger number of returns would be accepted without change or selected for correspondence audits.

There are several possible reasons for the outcome. One is that the final design of the sample to be examined required the selection of more complex, higher-income returns. Another is that the classification procedures...