By Pete Williams Justice correspondent
NBC News
updated 4/12/2004 8:36:21 PM ET 2004-04-13T00:36:21

As the April 15 tax deadline approaches, millions of Americans are scrambling to finish their returns. But new figures just out show that the biggest earners, American corporations, are least likely to be audited or to pay any taxes at all.

With tax preparation services shifting into overtime, figures just out show that individual taxpayers are three times more likely to be audited than American businesses — even though U.S. companies earn nearly four times what all individuals combined do.

In fact, says a Syracuse University study out today, IRS audits of business taxpayers continue to drop, down to an average of two audits for every 1,000 returns. What's more, the government says during the recent economic boom, nearly two-thirds of U.S. corporations actually paid not one penny in income taxes.

Democratic Sen. Byron Dorgan of North Dakota recently released a General Accounting Office study on corporations which don't pay income taxes. “This is massive tax avoidance,” says Dorgan. “This is the blue ribbon at the county fair for tax evasion. And it's not funny. It costs this country billions and billions and billions of dollars in lost income.”

The General Accounting Office says 61 percent of U.S. companies avoided tax payments entirely legally. How? By keeping operations overseas, for example, and offering employees stock options — a huge tax write-off.

Corporate tax lawyer Steven Bankler says, “When you have hundreds of millions of dollars of stock options that are now being deducted for federal income tax purposes, that can fairly well wipe out a company's tax liability.”

Analysts say businesses are more successful at legally avoiding taxes by structuring ever-more complicated financial operations. And for IRS auditors looking for cheaters, those are are harder to unravel.

But as workload grows, the IRS is shrinking. Since 1988, the number of returns steadily climbed, up 26 percent. But during that same period the size of the permanent IRS staff — trained and experienced — dropped by nearly a third.

The IRS commissioner, Mark Everson, says the agency is now beefing up enforcement, concentrating on clearly illegal offshore tax dodges. “We're working on the corporations, the complicated shelters. Some of these offshore deals don't have any substance other than getting rid of taxes. These are egregious violations of the law,” says Everson.

And the IRS pledges to crack down even more — provided Congress gives it enough to hire new enforcers.

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