ROANOKE TIMES 

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, April 17, 1991                   TAG: 9104170630
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-6   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

MOST COMPANIES DON'T REPORT ALL INCOME, AGENCY SAYS

Congressional investigators say two of every three U.S. corporations fail to report some of their incomes, resulting in tax avoidance of nearly $30 billion.

The General Accounting Office, an arm of Congress, said it found that tax compliance by corporations has fallen dramatically over the past few years and that the gap between what they owe and what they pay voluntarily has increased by nearly 200 percent.

GAO officials were reporting the findings today to the Senate Permanent Subcommittee on Investigations, which released an outline of the report in advance.

A business group immediately challenged the study as fundamentally flawed.

The GAO report "fails to recognize . . . that publicly held corporations are subject to strict financial reporting controls, independent audits and criminal penalties for violations of the securities law," the Tax Executives Institute said in a statement.

"It also ignores the fact that public corporations generally want to maximize their earnings and report as much income as possible," said institute President Michael Bernard, an assistant controller of the Mobil Corp.

Bernard said the biggest problem with the GAO study is its use of the term "tax gap." That phrase has been used in recent years in referring to the estimated $100 billion annual tax loss due to failure to comply with the law - the difference between what corporate and individual taxpayers owe in federal income taxes and what they pay voluntarily.

Bernard noted that in many cases, a corporation's taxes due are affected by various factors that have nothing to do with failure to comply. He mentioned, for example, adjustments the company might make on an amended return; proposed changes made by the Internal Revenue Service that eventually are decided in favor of the corporation and reversals by the courts.

The Senate subcommittee asked for the GAO report as part of an investigation into IRS efforts to bring corporations into compliance with tax laws. 


 by CNB