Here's really long, boring read, if you're looking for materials to put you to sleep!
<http://westerncpe.us2.list-manage.com/track/click?u=48c9757cae1cfd246a6cbcb02&id=cf426f160c&e=fc6aeb5bdb>
However, it has some very valuable information about who and why the IRS will be narrowing down their audits and what the new areas of focus (red flags) will be for the upcoming audit season.
Here are a couple of highlights:
* Of course the high-income taxpayers will always be a target audience. They are the most likely to just pay to have the problem go away, then waste their time on pulling the documents necessary to prove their positions on the returns. Also, these could lead to extension of the audit if there are flow-through entities involved in the personal audit.
* Developers and real estate investors will be a target audience. With partnership returns on the rise, the IRS has done some special training to target this growing target base.
* Employers are always a target. Specifically whether or not you have your employees properly classified (versus independent contractors), your form 1099 compliance and reasonable compensation for S Corporate officers.
* Cash basis businesses. This increase is due to the 1099-K reporting. The IRS will be looking for filers who only report exactly what the merchant sales were as income, leaving out any possibilities of cash or check sales. This is an easy and very profitable target audience.
Be aware of what might cause an audit and properly document your deductions! It can make all the difference between whether or the IRS letter is a short correspondence, or an every expanding audit!!
And, because I'm also a tax preparer, DON'T EVER TALK TO THE IRS WITHOUT REPRESENTATION! It's in your taxpayer bill of rights. Even if you don't have one, get one, before going toe to toe with the IRS. Politely take their card and let them know your representative will be contacting them shortly. And then, of course, have your representative contact them .
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