Were You One of the Unlucky Ones?
Were You One of the Unlucky Ones?Author: Keith Huggett
It was a tough year for the IRS in 2012. They underwent budget cuts, computer problems and they even took on the court system. And yet they maintained their service and enforcement priorities despite these challenges.
In the enforcement area, audits of individuals topped 1 million for the sixth year in a row, with a 1.03% coverage rate out of all tax returns filed. Audits in the upper income ranges remained substantially higher than other categories.
The IRS increased examinations across all categories of business returns by more than 12% in FY 2012, with the largest increases coming in audits of flow-through entities, which include partnerships and Subchapter S corporations. Rates exceeded 20% for the largest corporations.
The IRS collected more than $50 billion in enforcement revenue in FY 2012, the third year in a row topping that figure. This was lower than 2011 and 2010, but is still quite a bit in revenue. The Fiscal Year 2012 Enforcement and Service Results tables detail the audit, collection and taxpayer service numbers.
With statistics such as these, it stands to reason that either your business or your personal return may be selected for audit this year. You also should consider, if you haven't already, investing in an audit defense plan, so that you have someone to go to bat for you with the IRS, should you get audited. If an audit does occur, remember that it does not reflect upon you in any way. It does not mean that there is anything wrong with your return. It can be as simple as the IRS focusing on something, like a credit or deduction, which, though you honestly qualify for it, when they put in their data for audit selection, flagging your file. If you receive a notice from the IRS, and you have some questions, please feel free to contact us, we're always here for you. There is also some free helpful information on our website about personal and business audits.
