If you listen to the radio regularly, you’ll hear more and more commercials regarding tax representation. IRS audits are increasing and if you are contacted by the IRS the first thought that most people get is to panic!
Although audits are up, they still do not occur as much as you may think. The IRS stated that audit rates increased in 2007, both for overall individual rates and for higher-income taxpayers. One out of 11 individuals with incomes of $1 million or more faced an audit in 2007. Overall, the total individual returns audited increased by 7 percent. Audits of individuals with incomes over $200,000 reached 113,105 returns, up 29.2 percent from the prior year total of 87,885. The IRS increased audits of individual returns with income of $100,000 or more, auditing 293,188 of these returns in 2007, up 13.7 percent from last year’s total of 257,851.
We are now in 2010 and you can bet that audits will increase. The next few posts will talk about what you should do when you are contacted by the IRS. If you have specific questions, please feel free to post those also.
Help! I received a notice of tax deficiency, what did I do wrong? The next post will explain how audits are selected.