All Articles Tagged "audits"
What to Do If You're Audited
(LA Times) — It’s almost summer — time to think about bathing suits and vacations. But this summer there’s an increased chance you’ll open the mailbox to find a thick envelope from the U.S. Treasury. Welcome to audit season 2011. Blame federal deficits, wealthy tax cheats and petty larceny, all of which have federal tax authorities clucking over what they believe is a yawning “tax gap” between what people owe and what they pay. Whatever the reason, the federal government is stepping up income tax audits. The good news — and bad news — is that audits are increasingly being completed by correspondence, said Gary Iskowitz, a Los Angeles certified public accountant who serves on the IRS’ Tax Advocate panel. ”Over 80% of the audits are going to be conducted by correspondence exam,” Iskowitz said. “They’re far less time-consuming, which means the IRS can audit more people. But if you’re not careful, they can become a paper nightmare.”
IRS Tightens the Reins on the Rich
(Wall Street Journal) — The Internal Revenue Service is stepping up audits of wealthier taxpayers as part of a multiyear effort to crack down on tax avoidance. According to the agency’s latest statistical report for the fiscal year ended Sept. 30, the percentage of taxpayers who were audited increased in every category of adjusted gross income above $500,000, compared with a year earlier. The biggest jumps came at the top of the income ladder. About 18% of Americans earning at least $10 million were audited in fiscal 2010, up from 11% in fiscal 2009, according to the IRS. For those earning $500,000 to $1 million, the audit rate rose to 3.4% from 2.8%. Accountants and tax preparers said the IRS’s heightened scrutiny of wealthier taxpayers is in sharp contrast to the agency’s audit practices during the previous decade.
What to Do When Audited
(Businessweek) — There’s nothing that strikes fear into the heart of a small business owner like getting an audit notice. The chance of being audited in any given year is small: About 1 percent of 2008 taxable returns were audited, according to the latest available IRS statistics. But self-employed individuals and small business owners are more likely to be audited than employed persons, particularly if they report adjusted gross income of more than $100,000.Scott Berger, a CPA and tax principal withKaufman Rossin in Boca Raton, Fla., spoke recently to Smart Answers columnist Karen E. Klein about “hot spots” for IRS audits, what to do during an audit, and how to avoid audits in the first place….
What triggers an audit? The IRS will tell you it’s random. Their computers are programmed to look closely at differential scores, but how those are defined is closely guarded. There are all sorts of stories as to what generates an audit, but I don’t think there’s something specific.
Do certain things make an audit more likely, such as having an office in the home? It seems like the home office is not as big a deal as it used to be. On the other hand, if the auditor wants to look at the home office and finds the kids’ toys in there, they might challenge it.
Commissioner-Elect Wants Fulton Audit
(AJC) — An incoming member of the Fulton County Commission has responded to Commissioner Emma Darnell’s call for an independent audit of the county’s operations by saying it should go even further. Darnell said earlier this month that she wants outside eyes to take an in-depth look at department spending, which would go a long way toward proving whether the county government is as wasteful as its detractors claim. In a statement posted on her website, Commissioner-elect Liz Hausmann said such an audit should extend to every cent of Fulton’s budget and include a full personnel review. Hausmann on Jan. 5 will assume the District 3 seat representing fully incorporated suburbs in north Fulton, including two cities that formed with a push by critics of the county’s tax policy.
How to Fight the IRS
(WSJ.com) – Get ready for increased scrutiny by the Internal Revenue Service.
With Washington searching for ways to cut the budget deficit, IRS officials face intense pressure to collect more revenue. The agency plans more audits, especially of taxpayers in high brackets or those who are self-employed and deal in large amounts of cash. The IRS also has turned up the heat in such areas as offshore tax evasion, including undisclosed foreign bank accounts.
