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Archive for Audit

Corporate Executive Compensation Compliance: Audit Techniques Guide (Part IV)

Tom Kerester, Tax Ambassador, Tax Blog, Washington D.C., USA, TaxConnections

Every publicly held corporation maintains its executive compensation records differently. Likewise, every publicly held corporation maintains different methods for compensating its executives. As the examining agent, you must first learn the identity of the individual(s) within the corporation who are most familiar with how the executive compensation records are maintained. You will need to have a general discussion with that person regarding the record maintenance and retention practices of the corporation with regard to executive compensation. This discussion will help you narrow the focus of your IDRs and will also familiarize you with in-house terminology that is utilized by the corporation when discussing and researching records concerning executive compensation. Read more

IRS Audit Triggers: 10 Red Flags To Avoid

Robert Hartman, Tax Advisor, Tax Blog, Gambrills, Maryland, USA, TaxConnections

In 2017, the IRS received more than 152 million tax returns from individuals, married couples, and businesses. And these numbers are predicted to increase for 2018. With so many people filing, you’d think it’s highly unlikely to get audited. However, you should think again. Since the IRS began allowing e-filing, many people have been filing taxes themselves, which means they’re more likely to make mistakes.

This is one important reason why the IRS set up a filter system to pay specific attention to certain parts of your tax return and flag them if they seem suspicious or potentially inaccurate. You’ll have a much better chance of avoiding an audit if you keep these 10 IRS audit triggers in mind when you file your taxes. Read more

2017 IRS Data Book Shows Chances Of Being Audited

Ephraim Moss, Tax Advisor, Tax Blog, New York, USA, TaxConnections

The IRS has published the 2017 version of its annual IRS Data Book, which contains statistical information about the IRS and taxpayer activities during the previous year. The IRS Data Book helps illustrate the breadth and complexity of the U.S. tax system. According to the Data Book, during fiscal year 2017 (Oct. 1, 2016 to Sept. 30, 2017), the IRS collected overall more than US$ 3.4 trillion from taxpayers, processed more than 245 million tax returns and other forms, and issued more than $436 billion in tax refunds.

The IRS also audited almost 1.1 million tax returns during fiscal year 2017.  Almost 90% of the audited returns were individual income tax returns. While the percentage of overall returns audited was relatively low at 0.5% overall, the percentages were significantly higher for two types of taxpayers – wealthy individuals and individuals filing international returns. Read more

IRS Audit Rates Continue Downward Spiral

IRS, IRS Audit, Individual Tax, Mile IQ, Tax Blog, TaxConnections

For years, IRS audit rates have been declining as Congress has cut the IRS budget and its workforce has shrunk. The agency has relapsed its audit statistics for 2017, which marked the sixth consecutive year that audit rates have gone down.

The number of people audited by the IRS in 2016 dropped to just over 1 million. The last time so few people were audited was 2004. Since then, the U.S. has added about 30 million people. Read more

Am I At Risk For Being Audited?

Frank Hider, Tax Advisor, Dallas, TX, TaxConnections

Even though some IRS audits are chosen at random, there are a few factors that could put Texas taxpayers at an increased risk.

Taxpayers in Texas may understandably have a fear of being audited. After all, an Internal Revenue Service audit may be incredibly time-consuming and end in the consumer having to pay money to the government. However, that is not always the case. Read more

What To Do When You Receive An Audit Letter

Summer is typically when the IRS sends out notices and audit letters, so if you’ve received one, remember, first and foremost, don’t freak out.

Don’t panic!

After all, it’s just a piece of paper sent to you from the IRS. While the IRS can be scary, if you are a law-abiding taxpayer, I assure you even if you end up getting audited it’s not as scary as it seems. Read more

How Long Does The IRS Have To Audit A Tax Return?

A federal audit is, not surprisingly, an unwelcome event for most taxpayers. An audit is stressful and may result in a taxpayer owing additional money to the Internal Revenue Service (IRS). One question that many taxpayers have concerning federal audits is how long the IRS can take before auditing a tax return after that return has been filed. While the common perception that the statute of limitations on IRS tax audits is three years, the fact is that there are plenty of instances where the IRS can take much longer than that to audit one’s return. Below is a brief overview of the statute of limitations on tax audits in certain situations.
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Two Facts About Your Chances of Being Audited!

Your chances of being audited are probably lower than you think. A look at the latest IRS statistics for 2016 reveals two interesting and reassuring facts about the risk of an IRS audit.

One of these facts is that audits are becoming less common. The number of individual tax returns the IRS audited fell to a 12-year low last year, to just above 1 million. Audits have been declining steeply over the last five years, which the IRS commissioner said was due in part to declining budgets and a smaller workforce. Read more

The Service Issues New Administrative Authority Governing TPR Compliance

The Internal Revenue Service (hereinafter “IRS”; or “the Service”) recently issued on September 14th of 2016 an Audit Techniques Guide (hereinafter “ATG”) governing Tangible Property Regulation Compliance (hereinafter “TPR Compliance”).

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Penny Wise And Pound Foolish

Philip Wrigley had a problem. As the notoriously parsimonious owner of the Chicago Cubs in the 1970s, Mr. Wrigley did not want to spend big money to attract top players. But as the savvy owner of a successful confectionary business he also knew that no one would buy tickets to see a perennially second-division ball club. So he came up with the idea of the “loveable losers” a slightly-above average team that could win 80 or 85 games in a season.

The point of this story is that Mr. Wrigley did not want to be penny Read more

5 Common Myths About The Dreaded Tax Audit

Filing taxes is punishment enough without the vague threat of an IRS audit looming over our heads. For understandable reasons, the IRS insists on keeping the ins and outs of its auditing process on the murky side. How will you catch the bad guys if you give them the rule book first? But because of the sense of mystery around the process, it’s an area of regulation often misunderstood by taxpayers.

Here are a few common myths about the dreaded tax audit:

Myth #1: Only the wealthy get audited.

While it’s true that big businesses and the uber-rich are often targets of IRS tax probes, that doesn’t necessarily mean low- and middle-income workers are free and clear. The Read more

What If…

What if Adam and Eve had admitted that they ate from the Tree of Knowledge of Good and Evil, instead of pointing the finger at anyone else, and anything else, that happened to be there at the time? Would they still be lounging in the Garden of Eden today, munching on pomegranates instead of apples and perusing through YouTube videos on their iPads?

What if a small team of British commandos had been unable to disable Nazi Germany’s deuterium oxide factory in Vermork in 1943, after several prior attempts had failed? Would Hitler have gained the final component he needed for an atomic bomb, and attached these weapons to the V-2 rockets falling from the sky onto London?

What if that Star Destroyer captain had blown R2-D2’s escape pod to smithereens in the Read more

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