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IRS hikes audit rates

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in Small Business Tax

As it does every spring, the IRS has released a new “Data Book” containing charts of various audit figures. (IRS Internal News Release 2011-27, 3/14/11) The 2010 Data Book covers the federal government’s 2010 fiscal year (Oct. 1, 2009, through Sept. 30, 2010).

One thing jumps out right away: The overall examination rate increased to 1.11% in 2010 (up from approximately 1.06% in 2009), the highest the rate has been since 1997. In particular, the IRS zeroed in on individuals with total positive income (TPI) of $1 million or more last year, auditing 8.36% of these taxpayers.

Other groups that were singled out for extra scrutiny were taxpayers with TPI between $200,000 and $1 million, businesses with gross receipts of $25,000 and higher, and individuals claiming the earned income credit (EIC).

To read the full report, go to www.irs.gov/pub/irs-soi/10databk.pdf.

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