IRS Tax Audits: What You Need To Know

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Whether or not the Internal Revenue Service (IRS) will audit someone’s tax return is dependent upon the individual taxpayer’s income range and income type, according to Justin Hein, the managing attorney at Roni Deutch, A Professional Tax Corporation. There are a variety of red flags that the IRS uses in order to determine whether an IRS tax audit is warranted.

IRS audit red flags

Hein says that the IRS looks at claimed deductions and credits as well as income when deciding whether IRS tax audits are warranted. Year to year, the IRS will concentrate on a new flavor or area to inspect. The IRS might have an independent goal for that particular flavor, but it’s not a required number.

When there’s a need for the government to collect more money or if there’s a belief that certain taxpayers are skirting their reporting requirements, Congress and the Treasury Department motivate the IRS to conduct audits.

IRS tax audits: Is there a quota?

While there’s no official requirement for the IRS to do a certain number of audits every year, Hein says that they set goals based on the income characteristics of taxpayers nationwide. For taxpayers with a reported income of up to $200,000, it’s very rare to be audited by the IRS; only about 0.4 percent of taxpayers are actually audited by the IRS in this income range. However, 2 percent of taxpayers are audited by the IRS if their income is between $200,000 and $1 million. Individuals with over $1 million in income are looking at a 6.8 percent chance of being audited by the IRS.

What are your chances of getting audited by the IRS more than once?

Unfortunately, if you’re audited by the IRS once, you’re more than likely to audited by the IRS again. If you did something on your tax return which was flagged by the IRS, you’re likely to continue claiming the same credit or deduction again. “The good news,” Hein adds, “is that if you’ve been audited by the IRS two years in a row on the exact same issue, the IRS cannot audit you a third time on the same issue.”

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