5 Red Flags the IRS Looks for in your Tax Returns (part 1)

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In their bid to close the ‘tax gap’, the difference between the amount of taxes that are due and actual taxes collected, the IRS continuously scrutinizes your tax returns for evidence of under-payment or non-payment of legitimate taxes. According to the IRS, the tax gap amounts to some $350 billion each year. To recoup as much of this as possible, the IRS is specifically targeting taxpayers with high incomes, fat bank accounts, large investments and complicated taxes.

The IRS has beefed up its operations on collecting taxes from the wealthy by setting up the Global High Wealth Industry (GHWI) unit last year, staffed with its most aggressive and competent auditors. For those of you who earn more than $1 million a year, 8.4% of you will be audited. And if you earned for than $10 million, the percentage of you who will be audited is 18.4%, up from 10.6% last year. With the setting up of the GHWI unit, the audit rate for the rich is bound to increase.

In the past, the audit process involved one auditor looking through your 1040. But with the wealthy who have lots of assets and possibly various businesses with diverse sources of income, just one auditor is unlikely to suffice. However, with the GHWI, there will be a team of auditors each with expertise in a number of areas who will scrutinize your 1040.

Please see full article below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Darrin Mish, Tampa Tax Attorney, The Law Offices of Darrin Mish, P.A. | Attorney Advertising

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