IRS Tax Audit Statistics

In 2010 the IRS audited 1.1% of 142,823,105 individual income tax returns. After 2010, the IRS shifted its tax audit focus away from large corporations (assets over $250 million). Instead, the IRS has spread its tax audit focus among disparate taxpayers as follows:

1) Increased tax audits for pass-through entities (S-Corporations, Partnerships). Previously, in 2010, the tax audit rate was 0.4%. 

2) Corporations with assets between $250,000 and $10 million (plus) tax audit rates increased exponentially:

Asset Base           Tax Audit Rate
$250k – $1M            1.4%

$1M – $5M               1.7%

$5M – $10M            3.0%

$10M (plus)           16.6%

3) Individual Income Taxpayers
Tax audit rates increased correspondingly to higher income:

Income                Tax Audit Rate
$200k – $1M            4% (1 of 25)

 $1M (plus) 2011 (12.48%)

 Increased from 2010 – 8.4%
                            2009 – 6.4%

4) Taxpayer tax audit rates increased at higher adjusted gross income levels (AGI)

AGI                       Tax Audit Rate
$100k – $200k      0.71%
$200k – $500k      1.92%
$1M – $5M             6.67%

5) Individual tax payers with income under $200k had reduced tax audit risk:

Tax Year            Tax Audit Rate
2011                         1.02%
2010                        1.04%

6) Schedule C: Business income
Individual Income tax returns increased tax audit risk:

Type of Income     Tax Audit Rate
Non-Business Income   2.5%
(Not Schedule C)

Business Income
Schedule C                   2.9%

7) Business Gross Receipts
Audit risk declined for higher receipts (non-farm income)

Gross Receipts     Tax Audit Rate
$100k – $200k          4.7%

$200k (plus)             3.3%

8) Farm Income (Schedule F)
Individual income tax return
Tax Audit Rate: 0.4%

9) IRS Tax Audits (Individuals)
78.3% of individual income tax audits were correspondence audits (IRS field and office audits declined)

IRS increased number of tax auditors for taxpayers with international operations and financial products
2011: 600 more auditors added
2012: 300 more auditors added

If you have any questions regarding IRS tax audits please call Gary Wolfe for a free consultation at 323-782-9139.

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