Will California taxpayers see fewer audits?

By now, most everyone in California has heard about the scandals facing the IRS. Since the story first broke, there have been changes in leadership and the IRS remains under a microscope. As a result, rumors are circulating that there will be fewer audits conducted and when an audit does happen, it will be "kinder and gentler" than in the past.

Even in the midst of all of the controversy surrounding the IRS, the reality that it is only getting better at collecting taxes can't be refuted. For the 2012 tax year, nearly 1.5 million tax returns, or one percent of all tax returns, were audited. Over three-quarters of those returns only received a letter from the IRS indicating there was a problem with the return. In terms of real money, that means that for every $100 the IRS collected through audits last year, it only spent $0.48.

As technology improves, so does the business of auditing tax returns. It would not be advisable for anyone to believe that this would be a good time to "try and put one over" on the IRS. Investigators, both electronic and human, are still scrutinizing returns and ordering audits. That's not to say that taxpayers shouldn't take all of the deductions they are entitled to in order to reduce their tax liability, but it would be advisable to have the paperwork to back them up.

However, no one should take for granted that those audit letters from the IRS are infallible. Mistakes are still possible and some audits aren't accurate. Anyone in California that receives an audit letter from the IRS has the right to question its determination. Just because the IRS says something is true doesn't make it so -- that may be the true lesson for taxpayers in the IRS scandals.

Source: Huffington Post, "The Latest IRS News and How It Affects Tax Returns, Audits and You," Mark Steber, June 4, 2013

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