Taxation & Estate Planning

Tampa Tax Attorney, Darrin T. Mish asks "Will the IRS audit you in 2008?"

By Darrin Mish

The IRS is auditing more people these days and concentrating less on businesses.  The percentage of individual IRS audits has risen 14 percent in the last couple of years, and that trend looks to be continuing.  If you need IRS help with an audit looming before you, contact one of our professionals for advice.

What exactly is an audit?  An audit is a review of your filed tax return by the IRS (Internal Revenue Service).  The review is to determine the accuracy of your return.  However, here is an important point to remember:  You, the taxpayer, have the burden of proof on you, to prove that your tax return is accurate and true to the best of your knowledge.  This means that if the IRS were to question a deduction, for example, on your return, you have to prove it is correct.  The IRS does not have to disprove the deduction; you have to prove that it is precise and truthful as you reported it on your tax return.  If you cannot prove the deduction to the IRS, it may be prohibited for your use.

Who are the most likely individuals to be audited?  People who have unusually large deductions on their income tax returns; people who operate cash businesses; and certain professionals who garner the attention of the IRS are more at risk for audits than others.

If you have a possible IRS problem with an audit, or think you might have an IRS problem with an audit, and need IRS help, contact our friendly and professional staff and let us provide you with that assistance.

The IRS seems to have shifted its focus from businesses and corporations to the individual, ordinary, everyday citizen to scrutinize their income tax returns for flaws, errors, and fraudulent activities.  So, the best plan would be to make sure that all your “i’s” are dotted and “t’s” are crossed, as the saying goes.

Audits and enforcement principles took a back seat to customer service in the 1990s as that was the focus at that time.  Times are changing and the focus has now shifted back to auditing individual income tax returns.

It is more time-consuming and costly for the IRS to audit corporate returns and tax shelters.  Tax shelters are more involved and intricate to untangle.  Another factor is that money allocated to the IRS for resources and personnel has declined.  The IRS has had to shift money from enforcement efforts to cover administrative expenses.

Much of the intensification in auditing has concentrated on correspondence audits, as opposed to face-to-face audits between taxpayers and IRS employees.  Correspondence audits are much faster to complete and cheaper to implement, while attaining the veritable same result.
 

Full post as published by IRS Problem Solver Blog on April 09, 2008 (boomark / email).