IRS Commissioner John Koskinen recently noted that the IRS would conduct 1 Million audits in 2014, slightly down from 2013 but still a substantial number. The IRS will not tolerate cheaters, and the implementation of advanced automation and tracking systems will help to separate those flaunting the tax code from those who simply make a mistake on their returns. One of the questions the IRS is expected to review on this year’s returns is whether Americans who received insurance subsidies for the Affordable Health Care act received the right amount, or if they were paid too much. The subsidies were based on the taxpayer’s “estimated income” for 2014, and the IRS intends to compare that with the actual earnings for this year.
This year’s tax return will also have an important check box: “Did you have health insurance for 2014?” If the answer is “no” you will face new penalties under the new national health insurance provisions. Other audit flags include charitable deductions that are out of balance with income, high wage earners (the higher your income the greater the likelihood of audit), and claiming the same dependent as another taxpayer (i.e. divorced parents who both claim the same dependant).
IRS audits are serious business, and make no mistake – if the IRS contacts you with a question about your taxes or requests an interview with a Revenue Officer you are in a position of high risk. The tax agency’s principal strategy is to find or create an event that allows them to ask questions of taxpayers. Most taxpayers provide far too much information in an attempt to seem cooperative and to earn the “good graces” of the revenue officer. Unfortunately, this information is used against the taxpayer to expand the scope of the audit, and then take the questions into previous years resulting in ever increasing bad news: a huge tax bill. Protect yourself. If you’ve been contacted by the IRS or any California tax agency we invite you to contact us for a free consultation at 866-631-3470.
