Well, another tax season has come and gone. When it comes to taxes, there are two things to worry about, filing on time and audits. Since a majority of people have filed their taxes by now, we thought it would be beneficial to talk a little about IRS audits. Here is a look at some facts you should be aware of when it comes to being audited by the IRS.
The first thing you need to be aware of is that the IRS is being way more aggressive with audits than it has in a long time. We have all seen the recent financial drama caused by Government spending, which has dramatically increased in the last 10 years. For example, from 2002 to 2008 the national deficit increased 3.5 Trillion Dollars. And from 2009 to the present the national deficit has increased almost 2.5 Trillion Dollars more. How does the government plan to pay for the increase in debt? Well, the main source of funding for the government is through taxes. This means that the IRS is increasing, and will continue to increase, its efforts to collect taxes to help fight this dramatically increasing debt. The IRS will do this through auditing individuals and small businesses.
In addition to standard IRS audits, there is an increase in IRS letters going out questioning various tax deductions claimed on tax returns. Many people don't know how to deal with these letters from the IRS, so they just pay the bill and end up paying anywhere from a few hundred to a few thousand dollars in unnecessary tax.
Another way we can tell that audits are increasing is the amount of auditors being hired by the IRS. For example, a few years ago there were only two auditors in the entire state of Utah. Now there are over twenty. And in addition to more auditors, we have also noticed an increase in auditors making in person contact with individuals they suspect of owing tax by going to their homes and places of business. It has been years since we have seen actual IRS auditors going to someone's house or job. But in the last six months, we know of three people have an auditor show up in person to their home or work.
We are not giving you this information to scare you but to motivate you. We simply want you to know that you should be prepared.
There are several things you can do to be prepared. One great resource can be found at http://avoidbeingaudited.com/. They have some great tools to help you avoid being audited and to help you in case you are audited.
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