Robert J. Fedor, Esq., L.L.C.

Despite budget cuts, IRS will continue to scrutinize small business owners and wealthy

With the 2013 tax year now in American's rearview mirror, agents from the Internal Revenue Service are busy analyzing data to ensure the numbers match up. In cases with the IRS identifies discrepancies between an individual's reported income and claimed income, the IRS may choose to perform an audit. Thankfully for most Americans, today the chances of an individual taxpayer being selected for an IRS audit are less than one percent.

Recent revelations related to the IRS's admittance of biasness against conservative groups coupled with ongoing political backlash over the Obama administration’s Affordable Care Act have resulted in deep cuts in the IRS's annual budget. As a result, IRS commissioner John Koskinen recently admitted the agency has been forced to make spending cuts including those to funds previously used to conduct IRS investigations and enforcement procedures. 

Given these factors, Koskinen himself admitted the agency will not be able to catch certain things they would otherwise have been able to catch. While overall the chances of being audited are low, the IRS will continue to focus on small business owners as well as Americans whose annual income exceeds $1 million. Additionally, the IRS will continue to target corporations, especially those with assets in excess of $10 million.

Small business owners or individuals who fear their tax documents may be inaccurate and therefore draw the attention of the IRS would be wise to consult with an attorney. A criminal defense attorney who handles matters related to tax crimes and IRS tax audits can provide advice on how to remedy a problem with the IRS and help ensure an individual's rights are protected.

Source: CBS News, “Chances of IRS tax audit are lowest in years,” April 13, 2014.

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