How likely is it that you will be audited by the Internal Revenue Service? See our tax attorney’s recent article.

What is the Likelihood that I will be Audited by the Internal Revenue Service?

Clients and taxpayers, in general, are surprised as to the amount of information available on the Internal Revenue Service’s website regarding examination statistics.  As an example, the Internal Revenue Service recently issued statistics regarding tax returns examined in Fiscal Year 2010.  Overall there were 187,124,450 returns filed and 1,735,083 returns examined, which represents 0.9% percent of returns covered by examination.  That is less than one percent folks.  But, as always, the devil is in the details.  For example, the Internal Revenue Service examined 4.7% of returns filed where individuals reported gross receipts between $100,000 and $200,000 and filed a schedule C.  On the other hand, the Internal Revenue Service examined 98 percent of certain large corporate taxpayers.  So, it all depends.

The below chart provides a summary of the most common returns and taxpayers:

 

Type of Taxpayer Returns Filed Returns Examined Amount of Additional Tax (thousands of dollars)
Schedule C Filer - $100,000 to $200,000 in gross receipts 893,707 42,403 $923,734
Schedule C Filer - $200,00 or more in gross receipts 705,877 23,569 $528,770
Partnership Returns 3,423,583 12,406 N/A
S Corporation Returns 4,414,662 16,327 N/A
Employment Tax Returns 30,158,258 63,937 $1,245,789
Estate Tax Returns 42,366 4,288 $1,405,415

The question you very well may be asking yourself is, so, how does the IRS select tax returns for audit?  This is a question that we get asked quite a bit at Nardone Law Group.  To answer the question of how returns are selected for an audit, follow this link. 

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