We are cognizant of the fact that many people, just like you, are often intimidated by the thought that they could possibly be audited by the Internal Revenue Service. As we talked about in our last blog post, the IRS continually analyzes compliance levels for entities, issues and industries by conducting hundreds of compliance projects and initiatives each year. The IRS has announced emerging or significant areas that it will prioritize for the coming year.
The second target area for IRS tax audits:
High income/high wealth taxpayers. The IRS defines high income/high wealth taxpayers as those who bring in a total positive income of more than $200,000 a year. Total positive income includes all gross receipts and sources of income before expenses and deductions. Through 2013, the IRS will focus on taxpayers with a total positive income of more than $1 million who file a Schedule C business return. Last year, the IRS audited 12.5% of all individuals with incomes of more than $1 million – a significant increase from 2010, when the IRS audited 8.4% of these taxpayers.
Look for our next six posts for the remaining IRS target audit areas.