What are the Odds of an IRS Audit?News
Posted in on May 31, 2017
No taxpayer wants to be audited. Aside from the hassle of having to correspond with the IRS and assemble reams of paperwork, every audit also carries a threat that you will be found to have underpaid your taxes and will thus have to pay a substantial sum in unpaid taxes, fees and penalties. Those who are audited should work with a Virginia tax lawyer so they can ensure they do everything possible to come through the audit without a tax bill, or with the minimum potential taxes owed.
One question that's likely on your mind now that you've filed your taxes is whether or not you will be one of the taxpayers who ends up being subject to an audit and who is thus forced to deal with all of the implications of this investigative process. The good news is, there is not a very big chance you will be audited – but this does not mean that you shouldn't be ready in case an audit does happen to you.
Understanding the Odds
For most taxpayers, the odds of an audit are very small. There are around 145 million returns filed with the IRS, and 99% of individual tax returns are not audited. The low audit rates mean that, in 2016, you had around a 1 in 143 chance of being audited. The IRS commissioner indicates the chances of an audit are likely to be slightly smaller this year than last year, due to more returns being filed. That means the general risk of an audit is probably even lower than this 1 in 143 shot from last year.
Since certain types of income raise more red flags with the IRS, your chances of being audited could be even lower. If you have no rental real estate, don't have a farm, have no income from a business, didn't claim the earned income tax credit, and don't write off business expenses, the chances of an audit drop to 1 in 427.
And, the likelihood of an actual intensive investigation into your taxes – the type of investigation you probably picture when imagining an audit -- is actually even smaller. This is because close to ¾ of all audits are handled entirely by mail. In other words, the IRS will mail you a query about your taxes, you provide an acceptable answer, and his is usually the end of the mater.
If you do find that you're one of the few taxpayers who ends up being audited, you should ensure that you get the right help – especially if you're going to be involved in a more intensive investigation and must deal with an IRS agent in an office examination or a field audit.
A tax lawyer like Kevin Thorn can help you to respond to an inquiry from the IRS and can advise you throughout the entire process of the IRS investigating you. To find out more about how an attorney can assist you, you should call a lawyer as soon as possible when you've been notified that the IRS is taking a closer look at your tax returns.Share This Post