What are your chances of being audited? IRS's 2013 data book provides some clues

The IRS has issued its annual data book, which provides statistical data on activities conducted by IRS from Oct. 1, 2012, to Sept. 30, 2013, and includes information about returns filed, taxes collected, enforcement, taxpayer assistance and IRS's budget and workforce. In addition, the data book provides valuable information about how many tax returns IRS examines (audits) and what categories of returns IRS is focusing resources on, as well as data on other enforcement activities such as collections.

During Fiscal Year 2013, the IRS collected almost $2.9 trillion in revenue and processed 240 million returns, of which 151 million were filed electronically. Out of the 146 million individual income tax returns filed, almost 83% were e-filed. More than 118 million individual income tax return filers received a tax refund, which totaled almost $312.8 billion.

What are the chances of being audited?

During  2013, the IRS examined 0.8% of all returns filed in 2012, about 1.0% of all individual income tax returns filed in 2012, and 1.4% of corporation income tax returns (excluding S corporation returns). Overall, in 2013, individual income tax returns in higher adjusted gross income (AGI) classes were more likely to be examined than returns in lower AGI classes.

Of the 1,404,931 total number of individual income tax returns audited in 2013, roughly 34% of the returns reported an earned income tax credit (EITC) claim (up from the approximate 32.9% in the previous year). Only 24.5% of the individual audits were conducted by revenue agents, tax compliance officers, tax examiners and revenue officer examiners. That's slightly up from the 24.3% figure for the previous year. The 75.5% balance of the audits were correspondence audits, slightly down from the 75.7% for the previous year. The following are selected audit rates:

  • For business returns (for individuals not claiming the EITC and for other than farm returns) showing total gross receipts of $100,000 to $200,000, 3% of returns were audited in 2013, down from 3.6% in 2012.
  • For business returns (for individuals not claiming the EITC and for other than farm returns) showing total gross receipts of $200,000 or more, 2.7% of returns were audited in 2013, a decrease from 3.4% in 2012.
  • For nonbusiness returns showing total positive income of $200,000 to $1 million, 2.5% of returns were audited (down from 2.8% for the previous year); for business returns, 3.2% of such returns were audited (down from 3.7% for the previous year). In general, total positive income is the sum of all positive amounts shown for the various sources of income reported on the individual income tax return and, thus, excludes losses.
  • For 2013, the audit rate for returns with total positive income of $1 million or more was 10.8%, down from the 12.1% rate for 2012.





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