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TIGTA reports drop in smaller corporate income tax returns

The number of income tax returns filed by smaller corporations (those with assets under $10 million) dropped by seven percent from 2005 to 2009, the Treasury Inspector General for Tax Administration (TIGTA) revealed in a recent study. Total returns fell from 2.2 million returns for processing year 2005 (generally, returns filed for 2004) to 2 million returns for processing year 2009 (returns filed for 2008), the watchdog agency reported.

The decrease in returns was not consistent across various segments of the return filing population. Corporations with $5 to under $10 million in assets actually filed five percent more returns in 2009 than 2005. However, filings declined 16 percent for corporations with less than $250,000 in assets, and declined seven percent for corporations with assets of $250,000 to $1 million. Corporations that did not provide a balance sheet filed 16 percent more returns.

TIGTA suggested that the drop in corporate returns may stem, in part, from the increased popularity of passthrough entities such as partnerships and S corporations. Despite the drop in returns, the amount of income taxes reported by small corporations on their returns was significant -- $11 billion. TIGTA also reported that in 32 percent of the IRS's Fiscal Year 2009 audits of small businesses, the IRS made no changes.