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IRS gears up for random audits to reduce tax gap

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IRS officials have announced plans to launch a new National Research Program (NRP) compliance study for individual taxpayers. It will provide updated and more-accurate audit selection tools and support efforts to reduce the nation’s tax gap.

Alert: The latest NRP study will be the first of an ongoing series of annual individual studies using an innovative multiyear rolling methodology. The study will start in October and examine about 13,000 randomly selected individual returns for the 2006 tax year. Similar sample sizes will be used in subsequent tax years.

An advantage to using this method, which combines results over rolling three-year periods, is that it enables the IRS to make annual updates to compliance estimates and develop more efficient workload plans on an annual basis. Previous studies started from scratch, drew tax returns from a single tax year and involved examinations of more than 45,000 taxpayers.

“The new program will be a big step forward for tax research,” says Acting IRS Commissioner Kevin M. Brown. “Our approach will reduce the burden on taxpayers, improve our audit selection techniques and give us more timely information to help reduce the tax gap.”

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