With more businesses organizing themselves as partnerships, IRS needs to enhance audit efficiency, suggests a new GAO report.
United States Government Accountability Office in its September 2014 report on “Large Partnerships” has recommended that the IRS take multiple actions to enhance audit efficiency.
Audit efficiency: Growth in large partnerships
According to the report, businesses have shown increasing preference to organizing as partnerships and other pass-through-entities instead as C Corporations in recent years. As can be noted from the following graph, during tax years 2002 through 2011, the number of partnerships and S corporations of all sizes increased 47% and 32% respectively, while the number of C corporations declined 22%:
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