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RANDOM AUDITS FALL VICTIM TO BUDGET AX

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The IRS says it won't conduct exhaustive audits of randomly selected 1994 returns because of budget cuts, indefinitely ending a program hated and feared by most taxpayers.

Frank Keith, a spokesman for the Internal Revenue Service, said the agency decided to "indefinitely postpone" the Taxpayer Compliance Measurement Program, or TCMP, that was scheduled to start Dec. 1 for 153,000 taxpayers - marking what he said is an end to the 30-year-old program. The audits already had been delayed two months while Congress reviewed the IRS budget.The comprehensive audits, which take up to 30 months, were designed to spot trends to help the IRS target regular audits to where they'll do the most good.

But the Republican-run Congress is moving in a House-Senate conference committee to cut the IRS' 1996 budget from $8.2 billion to $7.4 billion, prompting the agency to cut back on its enforcement programs. Eliminating the TCMP audits will save the IRS $1.5 billion, according to Keith.

"From our point of view as tax administrators, it's a regrettable decision but unfortunately a necessary one," he said.

But taxpayers who underwent the random scrutiny, which required them to prove every item on their return - even producing marriage and birth certificates - have long decried the practice. And House Speaker Newt Gingrich, R-Ga., has compared TCMP audits to the Inquisition.

The battle to end the random full audits was led by former IRS Commissioner Fred T. Goldberg. Organizations representing tax professionals and the National Taxpayers Union Foundation also sought to end the audits.

"No one doubts that TCMP audits are intrusive, burdensome and expensive," Goldberg told a House Ways and Means subcommittee studying the program in July. "You must explain every bank deposit and every investment to show that you had no unreported income . . . Your word and some reconstructed notes will be worth little."