Do Not Let Downtick in IRS Audits Fool You, Increased Enforcement May Be Around the Corner

Swiss Bank Enters Into Amended Non-Prosecution Agreement With DOJ, Pays Additional $14 Million Fine
January 26, 2020
New IRS Pact Highlights Agency’s Desire to Work Alongside Other US Agencies to Fight Tax Fraud
January 28, 2020

Do Not Let Downtick in IRS Audits Fool You, Increased Enforcement May Be Around the Corner

Recently released numbers relating to audits by the IRS in 2019 have some taxpayers feeling a false sense of security about their own audit risk. But taxpayers should not be fooled. The IRS is expecting individual and business audits to increase in 2020 and beyond. Taxpayers who have failed to file a tax return in a timely manner or have filed a tax return that is at risk for examination should contact a tax defense attorney before the IRS contacts you.

The IRS recently released data indicating that in 2019, the agency audited only 0.45% of individual tax returns filed during the year, which is down significantly from the 1.1% of individual tax returns audited in 2010. The largest contributor to the decrease in IRS examinations is simply headcount. The IRS has steadily lost employees and due to recent riffs with Congress, has not seen an uptick in funding allocated to the agency, preventing adequate re-staffing.

IRS Expects to Increase Staffing in 2020

According to several sources, the IRS expects to receive additional funding this year, which will inevitably lead to hiring to reach and exceed 2010 staffing levels. The increased headcount will undoubtedly mean more revenue agents to lead examinations but will also benefit the agency’s effort to continue to improve their software aimed at detecting incorrect or fraudulent tax returns.

The IRS already has computer systems in place that analyze tax returns for mathematical errors, as well as for certain anomalies that may result in additional review by a revenue agent. If a tax return is flagged by the system and a revenue agent identifies certain badges of fraud, the return may be handed over to IRS Criminal Investigations to determine whether a crime has been committed.

If you have failed to file your tax returns in the past or if you believe that positions taken on your tax return put you at risk for audit, it is in your best interest to contact an experienced tax defense attorney. Your attorney will work with you to establish the facts involved in your situation and develop a strategy aimed at mitigating potential risks. In any event, it is typically more effective to play tax offense by proactively attempting to rectify prior tax noncompliance than it is to be defensive when the IRS begins to investigate you.

See our Audit Representation Q and A Library

See our Non-Filer Q and A Library

Contact an Experienced Tax Attorney Today

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing a diverse group of taxpayers. From individuals to middle market businesses and beyond, our team of zealous advocates will assist in the development of a strategy to help you reach your specific goals and objectives. Whether you are under a tax examination or are in need of tax planning advice, contact the Tax Law Offices of David W. Klasing today, online or by phone at (800) 681-1295, for a reduced-rate consultation.

In addition to our staffed main offices in Irvine,  the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento.

 

Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship.  With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link.   Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.

Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company?  Absolutely not!  See our policies that address this issue here.