There has been a lot of debate in recent years about the IRS’s audit selection methods. Some people claim that the IRS unfairly targets poor people over wealthy people, and we all have read the recent reports about the IRS targeting various political figures. Now it seems that a new criterion could come into play: companies whose CEOs prefer risky sports hobbies.
As it turns out, a study published by the American Accounting Association that was conducted by four highly reputable universities has concluded that CEOs who prefer risky sports hobbies are more likely to take a risky approach to their company’s tax planning.1
So why should the IRS bother with reading a corporation’s Schedule UTP, Uncertain Tax Position Statement, when it may be just as easy to uncover a corporation’s overly aggressive tax positions by asking whether the CEO likes sky diving? Car racing? Bull riding?
Have a CEO who simply likes to play croquet, bridge, or miniature golf? Don’t even bother auditing them, they’d never cheat.
But why should only CEOs who like risky sports be targeted?
What about people who:
- Order sushi in the desert?
- Wear plaids and stripes together?
- Eat strange foods … think jellied moose nose (a Canadian delicacy), fried tarantulas (a Cambodian specialty), or the Italian casu martzu (I’m not even going to describe this one https://en.wikipedia.org/wiki/Casu_martzu)?
- Drive solo in the diamond lane? or
- Regularly contradict their in-laws?
I mean, even if the audit selection success rate isn’t quite as accurate, it sure would be far more interesting for tax pros and auditors alike to review the new Schedule ULC, Uncertain Life Choices.