When people turn in their income tax returns, they’re often worried about getting audited. They may know that they tried to do everything correctly, so there was no intent to defraud the government. However, they’re still worried that they may have made errors.
How often do audits actually happen? It’s fairly rare. For instance, one study found that the total amount of audits carried out was less than one percent of all the tax returns that were filed. For corporate tax accounts, only 0.74% were audited. It was even less common for individual accounts, which were only audited at a rate of 0.44%.
What is the IRS looking for?
Since the IRS doesn’t audit the vast majority of returns, they are often just looking for discrepancies or errors. For instance, if someone turns in paperwork that claims an extravagant amount of deductions, but it’s not clear if those are all legitimate, it may be a red flag to the IRS.
If there are discrepancies in the paperwork and the numbers just don’t match, that could also indicate that mistakes have been made or inaccurate amounts were used to intentionally lower taxes, which would be a form of fraud.
In some cases, the IRS is just watching for paperwork that should match, but doesn’t. For instance, if someone claims that they only made $50,000 during the year, but their employer files documentation indicating that they paid that individual $200,000, the IRS may conduct an audit to find out where the error lies.
Audits are uncommon, but they do happen. If you learn that you’re being audited or you’ve been notified that you owe money to the IRS, it’s wise to get experienced legal guidance as soon as possible.