What are my Chances of Getting Audited?
The IRS reported audit rates for individual tax returns fell to its lowest level in a decade. According to the IRS, the individual exam rate has dropped 22% since the 2010 fiscal tax year. The drop brings the 2015 fiscal year audit rate to .84%.
The IRS attributes the decline to a series of budgetary cuts since 2010. According to the IRS Commissioner, John Koskinen, the IRS has lost 5,000 enforcement personnel in charge of tax collections, exams, and criminal tax enforcement.
Not all individual IRS audits have declined
Under IRC 7602, Congress provided the IRS with the authority to exam a taxpayer’s books and witnesses to ascertain the correctness of a tax return. There are different ways the IRS can audit you. The IRS can conduct an audit at its office (office audit), through the mail (correspondence audit), or at the taxpayer’s office (field audit). According to the IRS, field audits declined from 291,000 in fiscal year 2014 to 267,000 in fiscal year 2015 while correspondence audits increased from 951,000 to 961,000. Generally, the catalyst for a correspondence audit is income and payment information from third parties, such as Form 1099, W-2s, Form 1098(s), not matching to the return. For example, if you forgot to include a 1099 from a side job on your Form 1040, then you would receive an IRS letter, (CP 75, Letter 525, CP 2501, CP 2000, Letter 3219 (aka the 90 day letter), informing you of the missing information and proposing a tax liability.
The IRS’s mission is to ensure compliance with the US Tax Code. According to the IRS Commissioner, the federal government is “leaving tax revenue on the table.” The IRS Commissioner cites reports that conclude that every $1 invested in the IRS produces $4 in revenue.” It is the Commissioners opinion that without funding the IRS, you are welcoming tax cheats. Not all in Congress agree and believe in light of recent scandals, the IRS is a rouge organization that is adequately funded and mismanages the money provided. Notwithstanding the foregoing, statistics report that tax audits rates declined.
Contact Tax Attorney Todd S. Unger, Esq. Today
If you are the unlucky few undergoing an audit, then contact a tax attorney today. Todd S. Unger, Esq. can defend you against civil and criminal tax examinations. Whether you have overstated deductions or understated your income, the Law Offices of Todd S. Unger is prepared to defend you. Contact Todd S. Unger today (877) 544-4743.