The IRS generally has kept up its audit activity despite a $305,000,000 budget cut that reduced full-time staffing by 8 % over the past two years, including 6 % in the enforcement area over the past year. That 1.03 % audit rate last year was almost double the level of a decade earlier.
Then there are big corporations. Of those with assets of at least $250,000, more than 29% got audited in fiscal 2012, which ended last Sept. 30.“Like all smart businesses, the IRS wants to turn a profit these days,” according to a commentary by the National Association of Enrolled Agents, an organization of licensed of return-preparation specialists.“Currently, tax returns are selected for audit based on the chance that the IRS will find enough errors or missing income to generate additional taxes — and perhaps penalty and interest.”
We will continue this discussion in Are You an IRS Audit Target? Part II.
Are you Being Audited by the IRS?
Sources:
azcentral.com
msn.com
3 tips to avoid an IRS audit
Something less fun than doing your taxes? Getting an audit. Here's how you can avoid one.
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3 tips to avoid an IRS audit
Something less fun than doing your taxes? Getting an audit. Here's how you can avoid one.
Date 2/24/12,Duration 1:39,Views 180185
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The details of the IRS discriminant-function program are a secret. It includes more than just raw numbers. For example, if your tax return shows a ZIP code from a low-income neighborhood and you deduct a charitable contribution of $10,000, regardless of your adjusted gross income, the computer is going to notice. That doesn't mean you're going to be audited, but the probability has soared.
Want to play the audit game? The IRS audited 1,581,394 individual tax returns in the fiscal year that ended Sept. 30, 2010. That was a rate of 1.1%, up from 1.0% the year before. But only 22% of the fiscal 2010 examinations were face-to-face audits. The rest were correspondence exams.
Of returns showing income of $200,000 or more, the audit rate was 3.1% in fiscal 2010, up from 2.8% the year before.
Unless you fall within the specific targets or have substantial income, I'm betting that the probability of an IRS audit will go down this year. This is one of those lotteries that you don't want to win. How lucky do you feel?
http://money.msn.com/tax-planning/are-you-in-the-irs-cross-hairs-schnepper.aspx
Read more at: Tax Times blog
