Pretty much any kind of correspondence from the Internal Revenue Service (IRS) is enough to ruin at least lunch. Receiving notice of an IRS civil tax audit can send a quiver of anxiety through anyone. To provide a heads-up on avoiding tax controversy, we’re going to talk about common triggers of civil tax audits.
Our tax attorneys work with clients on civil and criminal tax matters of all kinds. Given the nature of the questions asked during an audit, it is often possible to pinpoint the audit trigger. Sometimes the cause of the audit is clear, like failure to file, submission of a false tax return, or something relating to an offshore tax holding or foreign bank account.
According to the IRS, most returns are not audited. For those who knowingly file with sketchy figures, this “audit roulette” can bring your name to the top of the pile for reasons that include:
- The high and the low of it: Individuals with income that is almost entirely wiped out by deductions risk being tagged for an audit. The IRS notes that 0.8 percent of those with income under $25,000 were audited in 2016, while 18.79 percent of those with income over $10 million received notice of an audit. It makes sense that the IRS, with fewer resources, is more likely to go after a greater number of high wealth individuals who may be sheltering hidden assets.
To read the rest of this post, please head over to the Fedor Tax Law Blog.