And the Audits Begin

By: Evan A. Nielsen

With tax season now concluded, the questions typically turn to audits and their ramifications. And there are some surprising things happening already this year regarding audits. Here are just a few:

  1. Due to budget cuts the IRS anticipates conducting 100,000 less audits this year than last. That’s a pretty substantial reduction overall.
  2. We’re seeing some audit notifications this year that were identified for audit over 18 months ago. This means the audit wheels are turning VERY slowly.
  3. 40% (+/-) of taxpayers who are “audited” actually end up receiving additional refunds according to IRS records for 2013. Our experience suggests this figure is much higher.
  4. Approximately 70% (+/-) of all audits are conducted via mail and do not require face-to-face interaction with an IRS agent.
  5. Random audits are substantially declining. That means the chance of being audited for no reason at all is declining sharply – also due to budget cuts.
  6. Many audits are now being targeted to specific questions on the return instead of a general audit to review all entries on the return. We’ve seen several of these recently.

Now the disclaimer –someone will be audited. Keep in mind that the IRS is constantly looking for ways of enhancing its enforcement efforts so don’t be surprised if new methods of review arise. And if you are selected for an audit, don’t panic. Pull the records together and present your case clearly and concisely. If you’re unsure of the approach, get help. The IRS is one of the largest, most powerful, and most feared organizations on the planet. But this is still a free country and even the IRS has to follow rules. With solid representation, your chances of getting through the process with good results are greatly increased.

Have you received an audit notification or want to reduce your chance of being audited? Call us today at (480) 888-7111 or submit a web request to schedule your free consultation.