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Apr 25, 2018

How IRS decides which tax returns are audited

Why is it that some people seem to get audited by the IRS on a regular basis while others avoid it altogether? This is a tough question to answer for a lot of people. They want to know what is going on with this, but the fact remains that they do not have all of the answers. Fortunately, the IRS has provided some clues as to which tax returns are more likely to get audited.

Abusive Tax Filers

Assuming the IRS has a reason to believe that a particular taxpayer may be abusing the system they are more likely to go after that person. That is a pretty obvious clue right there. There would be no reason for the IRS to ignore legitimate tips that they have coming in from everyday citizens and others. They are more likely to go over returns of suspected cheats with a fine-toothed comb than they might with other returns.

People Who Have Filed Improperly Before

Any person who has filed a return in the past in a way that was incorrect may draw a stronger look at their returns as well. It is not because the IRS seeks to punish a person for making a simple mistake. It is simply because the IRS knows that a person who has made an error in the past may be more likely to do the same in the future. They have to play the odds and figure out which tax payers they should look at more closely. Often it is those who have made mistakes before.

Large Corporations

Sorry Apple, Google, and Coca-Cola but you are more likely to have your tax returns reviewed by the IRS than is the average citizen. Large corporations draw an increased amount of review from the IRS because their returns are often so complex. It is common for the IRS to find filing errors with large corporations that are pretty significant. Rather than wasting their time tracking down individual taxpayers and trying to shake some money out of them, the IRS will often go after big corporations that they know have some deep pockets. Their reviews are often looked at on a yearly basis.

Computer Selection And Randomness

Sometimes the person selected for an audit is chosen because they have filed a type of return that the IRS has had difficulties with in the past. That could point the fact that they might have problems in the future as well.

In addition to all of this, the IRS randomly selects a group of taxpayers to audit each year. They do this to try to spot check themselves but also in an attempt to keep everyone honest. This is when some everyday people might find themselves behind the barrel of an IRS audit. When you factor all of this in, you can see how the IRS comes up with their systems for selecting those whom will face an audit. It is not necessarily out of spite as you might imagine it is.

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Phone

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