Feeling lucky? There is one lottery, the IRS audit lottery, that
you’d probably just as soon lose. Contrary to what you may have
heard, the IRS audit program is alive and well. The IRS has begun a
new round of random audits, numbering about 50,000, in an attempt
to refine their future audit selection process.
About 7,000 of these
”
winners
”
will probably never know that they were picked for audit. The
IRS will be able to get the information they need by matching their
documentation with the information reported on the tax return.
Feeling lucky? There is one lottery, the IRS audit lottery, that you’d probably just as soon lose. Contrary to what you may have heard, the IRS audit program is alive and well. The IRS has begun a new round of random audits, numbering about 50,000, in an attempt to refine their future audit selection process.
About 7,000 of these “winners” will probably never know that they were picked for audit. The IRS will be able to get the information they need by matching their documentation with the information reported on the tax return.
Another 7,000 taxpayers will be mailed questions about items on their returns. If you have proper documentation to answer the questions, your experience should end there.
For the next 32,000 taxpayers, winning the audit lottery becomes more unpleasant. The IRS will inform you about the specific areas of your return that are being questioned and ask you to call for an appointment. At this point, you might want to consider hiring a tax professional.
The final group of unlucky winners have really hit the jackpot. Their returns will be subject to “calibration” audits in which every line of the return may be subject to verification. These audits replace the dreaded Taxpayer Compliance Measurement Program (TCMP) audits that were discontinued several years ago. According to the IRS, the new audits will not be quite
as intrusive as were the TCMP audits. The data gathered from these calibration audits will be used by the IRS to improve their audit selection process. If your return is selected for this type of audit, your wisest choice is to hire a tax professional.
The IRS is also increasing its audit activity in specific areas in its attempt to prevent tax abuses. High-income taxpayers and the self-employed will be subject to more audits than ever before.
Barbara Andres is a CPA and a partner with the accounting and business consulting firm of Bianchi, Lorincz & Company located in downtown Hollister.
