It is still true that an S-corporation or partnership is less likely to be audited than a sole proprietorship. However, the IRS has recently increased pass-through entity audits and decreased audits of large C corporations. From 2014 to 2015 S-corporation audits increased by more than 11% and partnership audits have increased by more than 18%. In the same period large corporation audits decreased by almost 9%. Just because a small company is being pulled for audit does not mean the IRS thinks its tax return is wrong. Most companies that are pulled for audit are pulled at random by the IRS computers that look at different factors to pull sample companies for audit.