What are your chances of being audited by the IRS?  


Three Main Types of IRS Audits

Red Flags

Document Matching

What to Do If You Receive an Audit Notice

In a Nutshell

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General Information

The Internal Revenue Service has released its enforcement results for fiscal year ending September 30, 2005. Speaking at the 5th Annual Tax Convention for tax professionals at Long Island University, New York, on December 1, 2005, IRS agents confirmed the federal taxing authority has collected a staggering $2.4 trillion from auditing and enforcement.

(a) Audit of individuals earning less than $100,000 has increased more than 20 percent.

(b) Audit of individuals earning more than $100,000 surpasses the government target of 221,000 individuals and it is the highest in ten years.

(c) Audit of small business increased 145 percent (from 7,297 last year to 17,867 this fiscal year).

(d) Audit of large corporations with assets over $10 million increased by 14 percent.

(e) Audit of illegal tax shelters including offshore tax shelters has brought in $3.7 billion.

The taxing authorities are back in enforcement mode. They are sharing information with other government agencies and with the taxing authorities in other states. They have hired a slew of tax auditors, tax attorneys, revenue agents, and enforcement personnel to represent their interest. It is important that you have the best tax specialist on your side.

Individual returns are divided into groups based on the type of occupation and income earned. The IRS expects to see a certain amount of itemized deductions on tax returns reporting between $50,000 and $100,000 of income. Professionals working in a certain specialty in a given geographic are expected to report a certain amount of gross income. The groupings, breakdowns, and average dollar amounts are a closely guarded secret by the IRS.

Business tax returns are grouped by the type of business and their geographic location.

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