Recent audit figures released by the IRS show California has the second highest rate of IRS audits as a percentage of the population. Why does California rank so high on this list? The answer is as simple as the number of high income tax filers. Notorious bank robber Willie Sutton was reportedly asked “Why do you rob banks?” He allegedly answered “Because that’s where the money is.” While there may be some question as to whether or not Willie Sutton is actually the source of this famous quote, there is no question the IRS audits high income taxpayers “because that’s where the money is.”
If the IRS audits a $500,000 tax return or a $50,000 tax return which do you suppose offers the highest potential for additional tax collection for the IRS auditor? Don’t be lulled into a false sense of complacency. The IRS audits returns all across the income spectrum, however, high income earners face a much higher risk of IRS audit and this is why California has the second highest rate of IRS audits in the nation.
After decades of experience protecting and representing US taxpayers in an IRS audit I can tell you one thing: Taxpayers should never communicate directly with the IRS. The reason again is quite simple: the IRS auditors are highly trained, highly skilled interrogators who are in a position of significant power and authority. Most taxpayers provide far too much information in response to requests from their auditor. After all, the taxpayer wishes to seem cooperative and “honest” by freely providing information. The reality is the IRS auditor doesn’t care. Their job is to maximize the revenue from your audit no matter what, and they will use this information against you to expand the scope of the audit and increase the amount of taxes you owe.
The second piece of information I would share with you is: The IRS has selected you for a reason, and they have already developed a strategy for your audit and a target amount of additional taxes they intend to take from your bank accounts.
If you have been contacted by the IRS for a field or office audit you should not respond directly. We invite you to download our free guide “What to Expect from an IRS Audit” and call for a free consultation at 866-631-3470. Ask about the protections of the attorney-client privilege and how you can protect yourself. There is a reason why California has the second highest rate of IRS audits and a reason why the IRS is targeting you: “Because that’s where the money is.” The amount our clients pay for representation and protection during an IRS audit is almost always far less than what they would owe the IRS without representation.