Are you an IRS Audit Target?
The IRS has announced that it is turning up the heat on small business operations. This isn't surprising in light of recent IRS analysis indicating that underreporting by small businesses is responsible for 84 percent of an estimated $450 billion “tax gap” between the tax revenue that is owed and the amount that has been collected.
When it comes to choosing tax returns to audit, the IRS is on the lookout for certain items. The IRS never reveals the exact formula for audit selection, but the tax agency does reveal some information about which taxpayers have a higher-than-average chance of having their returns examined. This article details some of the current and on-going individual and business audit targets.