WASHINGTON - The Internal Revenue Service has begun routinely looking at tax returns of executives at hundreds of big U.S. corporations, after a pilot program covering two dozen companies turned up significant problems, The Wall Street Journal reported Wednesday.
The initiative is part of a broader IRS focus on the well-to-do, including highly compensated executives, entrepreneurs and others, after years of relative neglect of those groups. The IRS is also extending its scrutiny to executives of big charities and other nonprofits.
The IRS crackdown was prompted in large part by alleged tax dodging at companies like Enron Corp. Those problems led the IRS to start taking a closer look at how companies were handling a range of executive-compensation issues, including stock options, deferred compensation, golden parachutes and fringe benefits. The preliminary investigation at two dozen unidentified companies started in 2003.
Because of problems the pilot program exposed, "we're moving toward a position where we routinely look at compensation of executives when we conduct our audits of corporations," IRS Commissioner Mark Everson said in an interview. To do that, agents "are going to pull the returns of key executives to determine whether the compensation has been correctly recorded."
-Wall Street Journal Staff Reporter John D. McKinnon contributed to this story. Dow Jones Newswires 03-02-05 0507ET Copyright (C) 2005 Dow Jones & Company, Inc. All Rights Reserved.