The USA Today released an article yesterday citing the “Center on Budget and Policy Priorities” which stated the IRS has 20% less resources for enforcement today than in 2010.  So is it time to pop the corks, get creative with some numbers and take some risks with the IRS?  Not so fast friends, the IRS may have fewer employees but their systems have greatly improved and the efficiency with which they can process information and identify audit targets is greatly improving.  You might actually be at a greater risk than ever if you are “working in the gray areas” so to speak.

“Robo-audits” of US taxpayers are becoming more increasingly common.  IRS enforcement systems are looking for those outside of the typical bell curve for a specific item or deduction.  The IRS has also begun to compare your own information year over year in an effort to determine areas where a big differential exists from previous norms for your own returns.  Each year, the IRS establishes behavioral patterns where taxpayers are abusing the system, and systems target those who fall outside of the IRS established norms for those issues.

An IRS audit is an expensive experience fraught with risk for any US taxpayer.  Robo-audits increase the likelihood that self-employed business people, high wage earners or those taking deductions outside of established norms will face an increased risk of for an IRS audit.  Don’t let the news of budget cuts at the IRS encourage you to take more risk.  Now more than ever, it is important to carefully scrutinize your returns and come into compliance with FBAR regulations, legitimate business deductions and charitable contributions.

You deserve every tax deduction you can legally identify and document.  We are here to help you to minimize your exposure to the IRS – both from the perspective of taxes paid and risk of an audit.

 

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