Starting in 2004, corporations with at least $10 million in gross assets will have to file a new schedule with their corporate income tax returns — Schedule M-3 — that will help the IRS understand better why the company is reporting less taxable income than book income. The IRS hopes it will help identify potential audit issues more quickly . . . . A survey of corporate tax directors found that the five worst US states in which to locate — because they have the “most unfair and unpredictable tax environments” — are New Jersey, California, Massachusetts, New York and Pennsylvania. The survey was reported in the January issue of CFO magazine . . . . Two economists, Rosanne Altschuler with Rutgers and Harry Grubert with the US Treasury Department, wrote in a paper in December that US multinational corporations managed to reduce their global average effective tax rates by 12 percentage points since 1980, with a sizeable drop coming between 1998 and 2000. The reduction in tax rates before 1998 was due mainly to competition among governments as they cut corporate tax rates in an effort to attract business. However, since then, companies have managed to cut their tax rates further by “stripping” income from countries where they have operating subsidiaries — for example, by having the subsidiaries make royalty payments for use of intellectual property. The share of total royalties paid to two prime countries for holding intellectual property rights — Ireland and Singapore — doubled in five years.