The IRS has stepped up their collection efforts and many taxpayers are in fear of an IRS audit. With the development of more sophisticated computers, faster communications and improved accounting software, the IRS can successfully complete over 2 million audits a year. This statistic certainly increases the odds for certain taxpayers to be called forward for an audit. The IRS says most people are selected for audit based on a computer analysis to determine which tax returns are most likely to be in error. The bigger and better the computers, the more audits.

The IRS is currently selecting approximately 2% of the total taxpayers per year for audit. While this seems to be a small amount of taxpayers in the grand scheme of things, there are certain things that will trigger an audit quicker than others. Most returns selected by the IRS for audit have either tax deductions that appear to be too high in relationship to the person’s income, deduction line items that are erroneous, line items that require proof or an explanation, or items that are featured on the IRS’ list of hot tax issues. The IRS strikes a considerable level of fear in all taxpayers to encourage voluntary compliance with the income tax laws. The Audit is probably the first step in an escalating cycle of fear over taxes.

Although the IRS audit targets change with the times, they still audit over 2 million Americans a year. Don’t go into an audit without counseling with a tax expert first.

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