An update on IRS happenings
IRS audit rate is relatively low. Individual returns had about one out of 167 returns audited. Most of those were done by mail with just one or two issues to be resolved.
The audit rate for C corporations (regular corporations that pay their own tax) was about 1 percent in 2017 for C corporations that had assets of $5,000,000 or more.
On the other hand, Partnerships were audited seldom, about 40 of 1,000 returns. S corporations were audited about 30 out of 1,000 returns. 43 percent of Partnership audits had no change. About 29 percent of S corporation audits had no change.
Individual taxpayers who claimed the earned income credit had about 1 out of 100 returns audited.
Individual taxpayers who ran a sole owner business with more than $25,000 of gross receipts experienced IRS audits of 1 or 2 out of 100 returns filed.
Individual taxpayers with income between $200,000 to $1 million had about 8 returns out of 1,000 audited if they didn’t have a business (Schedule C). If they had a business, then about 16 returns out of 1,000 were audited.
If the individual taxpayer had income of $1 million or more, about 45 out of 1,000 were audited.
IRS will try to reprogram its computer systems, update hundreds of forms and publications, try to educate taxpayers on the new tax provisions and continue issuing regulations, notices, etc.
If you get an audit notice from IRS, don’t panic. Just organize your records to show how amounts were determined and consider having a CPA handle the audit or at least go with you to IRS.
The national taxpayer advocate said IRS has a serious problem in training employees.
A federal court ordered a virtual currency firm to turn over information to IRS for U.S. citizens who bought or sold bitcoins. IRS has a team of investigators who are looking for fraudsters who used bitcoin or some other virtual currency to evade U.S. taxes.
IRS is supposed to be developing more taxpayer friendly procedures. We’ll see how that goes.
Please remember IRS doesn’t make telephone calls to say you owe taxes or are due a refund. There are lots of phone scams going on. If you get one of those calls, don’t give any information.
Did you hear “There isn’t anything in your life that cannot be changed.” Cariline Myss
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.