March 07, 2012
Joseph Perry, Partner-in-Charge, Tax & Business Services, Quoted in U.S. News & World Report Article "9 Warning Signs You're About to Get Audited"
The IRS is on the prowl—possibly for you. Thanks to improved detection systems and computerized checks, the IRS can more easily identify red flags that trigger audits, says Joseph Perry, a partner at Marcum LLP, a public accounting firm. “They definitely contact taxpayers more frequently,” he adds.
Contact typically starts with a letter requesting more information and can lead to in-person meetings. Perry says it’s usually triggered by a tax return that contains something unusual, such as an above-average deduction or change in income from previous years. As long as the taxpayer can defend his filings with the proper paperwork and logic, Perry says he has nothing to worry about—other than the time it takes to respond.
Before you start looking anxiously at the mailbox, wondering if the IRS will be mailing you a letter, consider whether any of these nine signs that you’re about to get audited apply:
1. You made a lot less money last year. Perry says the IRS looks out for any major changes in income, which can signify that a taxpayer is under-reporting his earnings. Since the IRS tracks historic data, people who suddenly start reporting much less income can be flagged for an audit.
2. You lose or forget to file a form. Since employers send copies of all 1099 forms and W-2 forms to the IRS as well as to you, if you lose your version or forget to file it with your taxes, the IRS can flag your return for review. If you receive a form that looks like it has an incorrect amount or inaccurate information on it, Perry suggests talking to your employer before filing your taxes. You want to make sure the information you provide to the IRS matches up with any other information they are receiving about you.