DBTC Law Firm

Will You Be Audited?

Will You Be Audited? Where You Stand With The IRS: The IRS annually publishes a “data book” providing extensive data on IRS activities. It provides clues as to what would flag a return for audit. For the fiscal year ending 9/30/13, about 1% of all individual income tax returns were audited. Certain areas indicate they are at higher risk for audit selection than others. While a detailed review of the 2013 data book is beyond the scope of this article, certain highlights are noted.

Of those returns audited, an extremely high 34% claimed “earned income tax credit,” making this among the highest audit risks on personal tax returns. With the average audit rate being 1%, 3% of individual tax returns which showed business gross receipts of $100,000-$200,000 were audited, while only .4% of farm income returns were audited. The rate of audit for returns showing total positive income of $200,000- $1,000,000 was 2.5%, and for returns showing positive income of $1,000,000 or more was 10.8%. In summary, claiming earned income tax credit, individual business returns showing gross receipts of $100,000-$200,000, and high income individuals were the highest targets for audit.

Other highlights: 83% of the 146,000,000 individual income tax returns were e-filed, refunds were paid to 118,000,000 of those 146,000,000 returns, with refunds exceeding $312 billion. The IRS spent 41 cents to collect each 100 dollars in tax revenue during the fiscal year.

An electronic version of the 2013 Data Book can be found on the Tax Stats page of the IRS website, www.IRS.gov.

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