As tax season approaches, many California residents may believe that their chance of facing an IRS audit is relatively small. Yet while audits are certainly not commonplace, they are not necessarily rare either. Moreover, the IRS is increasingly turning to so-called “unreal” audits that target far more taxpayers as the agency attempts to enforce the tax code.
The IRS audited 1 percent of all taxpayers in 2010. While that number may seem small, it means that one out of every hundred taxpayers found themselves confronted with an IRS audit that year. Although the federal agency does tend to audit wealthy taxpayers more often than middle-income taxpayers, the IRS still audited 0.6 percent of those with an adjusted gross income of between $25,000 and $75,000. This means that quite a lot of people will face an IRS audit at some point in their life.
Moreover, the IRS targeted 9.2 million taxpayers in 2010 with unreal audits. These audits are typically conducted via a letter informing the taxpayer of an error with his or her return. While it is certainly less intrusive, an unreal audit is still bothersome.
No matter the type of audit that a taxpayer faces in California and elsewhere, it is important to deal with it as soon as possible. Often, the services of an experienced tax law attorney prove to be invaluable in gathering the required information to satisfy a request from the IRS. Moreover, an attorney may also be able to provide help with tax compliance and assist in favorably resolving any claims the IRS may make about a return.
Source: Poughkeepsie Journal, “Tax audits aren’t as rare as you think,” Sandra Block, Feb. 12, 2012