IRS to Audit More Small Businesses

A restructuring announced by the Internal Revenue Service recently could mean that more small businesses see audits of their income tax returns.

The IRS said it would be adding 2,200 new positions to its enforcement, or audit, operations in 2005, having consolidated or cut back in other divisions. The agency noted that between 1996 and 2002, its enforcement personnel declined by more than a quarter.

Expect more audits of small companies and their owners in 2005 for the 2002 and 2003 tax years. Although the staff won't be full increased until next year, agents can still look back at prior-year returns.

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