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What are your chances of being audited?

by Tim Schlotterer

Will the IRS be knocking on your door?

The IRS recently issued their annual data book providing statistical data on activity within the IRS.  Here are some interesting statistics to share with you:

  • Of the 142,823,105 total individual income tax returns filed, 1,581,394 were audited.  Of these returns, 473,999 were audited for the earned income tax credit.
  • For individual returns showing income between $200,000 and $1M, 2.5% of the returns not showing business activity were audited and 2.9% of the returns showing business activity were audited.  The audit rate for returns in excess of $1M was 8.4%.
  • The audit rates for entities were as follows:
    • Corporations with assets of $250k to $1M – 1.4%
    • Corporations with assets of $1M to $5M – 1.7%
    • Corporations with assets of $5M – $10M – 3%
    • Corporations with assets greater than $10M – 16.6%
    • Partnership and S Corporations – 0.4%

Check your math.

  • The IRS identified 10.5 million math errors on individual tax returns. 60.8% of these math errors were attributable to the making work pay credit.  The making work pay credit was a refundable credit based on earned income and was available to individual taxpayers in 2009 and 2010.
  • 9% of the errors can be attributed to tax calculations such as self-employment tax, alternative minimum tax and household employment tax.

Go directly to jail. Do not pass go, do not collect $200.
In 2009, the IRS assessed 27.1 million civil penalties against individual taxpayers.

  • The IRS initiated 4,706 criminal investigations in 2010.
  • There were 3,034 referrals for prosecution and 2,184 convictions. Of those sentenced, 81.5% were incarcerated.

 

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