A new Internal Revenue Service team looking at the business activities of the ultra-wealthy has missed its own goals, reviewing only one privately held company and 10 partnerships in fiscal 2011, said a Syracuse University research group on Tuesday.

The IRS team in late 2010 set a 2011 goal of auditing 15 privately held companies known as S-corporations and 60 partnerships during the year, said the Transactional Records Access Clearinghouse (TRAC) at Syracuse.

"This program has not lived up to the fanfare with which it was announced," said TRAC, which uses data obtained by court order under Freedom of Information Act requests.

The IRS defended its work. The TRAC "report is highly misleading and it's absolutely wrong to suggest that we're not auditing millionaires," said Terry Lemons, an IRS spokesman.
He acknowledged that the tax-collecting agency's "global high wealth group" had missed its business audit targets, citing "severe budget limitations."

Lemons said up to 100 cases are under examination by the team with hundreds of tax returns under scrutiny.

The new team was announced by IRS Commissioner Douglas Shulman in December 2009. It had about 100 employees on staff through January. Its aim was to combine audit techniques for businesses with personal returns from wealthy people who get income from partnerships and other income-sharing businesses.

The team had completed 36 audits of millionaire taxpayers in the 17 months through February 2012, according to TRAC.

(Reporting By Patrick Temple-West; editing by Kevin Drawbaugh and Tim Dobbyn)