It seems like just yesterday that your pulse was pounding, your heart hammering and your eyes popping as you put your federal tax return into the mail, or hit "Submit." OK, maybe April 15th wasn't quite that dramatic for you, but it is hardly anyone's favorite day.
More than a month has gone by since then and many Cleveland taxpayers are wondering if they might be hearing that they are the subject of an IRS audit. Many regular readers will no doubt recall that the head of the IRS reassured worried tax-filers that budget cuts resulted in a "deeply disturbing drop" in the agency's individual tax return audit rates. Good news: last year's "disturbing" drop is being followed by another "disturbing" drop. So even fewer audits will be conducted this year. Kiplinger points out that the downside of this is that audits help pay the bills. For every dollar the IRS spends auditing someone, it brings $4 in to U.S. coffers.
Nevertheless, most taxpayers -- including those who do their best to file complete and accurate returns -- hope they are not subject to an audit. The odds are definitely in your favor: more than 99 percent of returns are accepted by the taxpayer as is. Even for that person who can't beat the 1 in 116 odds of being audited, Kiplinger reports that three-quarters of those are handled wholly by mail. No IRS agent comes to your door. And if you don't have income from a business, farm or rental, and you don't have employee business expenses or an earned income credit, your chances of being audited improve to about 1 in 300.
Still, there is that one person out of 300 who must deal with an audit. For those worried that the IRS is suspicious of your financial activities, talk over specifics with an experienced tax attorney during the audit and after the process has concluded. That way, all possible resolutions are examined by attorneys deeply familiar with audits and appeals of audit findings.
