tax audit question....

[fe342185]

Hi All,
I just had a general question regarding tax audit. How many years can the IRS go back to audit? A friend of mine got audited twice and she was wondering the chances of it happening again. Thanks all..

[pnosko]

Google is your friend.

Time Limits for Refunds, Audits, and Collections

[Weatherman]

Also, after you are audited the first time, you go on the IRS's "hit list". I was audited for my 1999 return, and have been audited an additional three times, since (2002, 2003 and 2005).

In only one of those cases could the IRS prove I owed them more money, and it only amounted to a little over $500.

So, when you are audited once, it's likely you will be audited again, and again, and again (not for the same tax year, but for one of the following years).

[BrianD]

Originally posted by Weatherman
Also, after you are audited the first time, you go on the IRS's "hit list". I was audited for my 1999 return, and have been audited an additional three times, since (2002, 2003 and 2005).

In only one of those cases could the IRS prove I owed them more money, and it only amounted to a little over $500.

So, when you are audited once, it's likely you will be audited again, and again, and again (not for the same tax year, but for one of the following years).

Could you cite some authoritative source for this claim, other than your anecdotal experience?

[BigSkyBart]

Originally posted by BrianD
Could you cite some authoritative source for this claim, other than your anecdotal experience?

If I knew the difference between anecdote and antidote, Jimmy Johnson might still be alive.
When we were 10 years old, a rattlesnake bit him & I started reading funny stories to him from the reader’s digest.

[The Grim Reefer]

The only "list" belongs to DC. I'd rather get audited.

[Weatherman]

Originally posted by BrianD
Could you cite some authoritative source for this claim, other than your anecdotal experience?

A more precise way of putting it is that once you start doing something “unusual”, and continue doing “unusual” things, your probability of being audited is higher.

fe342185’s friend had already been audited twice. This suggests that whatever stood out on her tax returns was not a one-time event or mistake.

When it comes to the IRS, the best thing you can do is be “normal”. If you start doing, and continue to do “unusual” things, even if those things are perfectly legal (and, hopefully, profitable), you should expect the IRS to send you love letters much more often.

[BrianD]

The IRS doesn't put people on a "hit list". That is as simple as I can put it. Being audited does not increase your chance to be audited again in the future.

[The Grim Reefer]

My uncle and cousins used a tax guy years ago that had been a long time IRS agent. I couldn't believe the crap they got away with I got to BS with him once and he told me a certain percentage are audited by the luck of the draw but mostly its because you popped up a flag with your deduction in one or more areas.

[InLimbo87]

Like Grim said, it really comes down to if your return throws up any "red flags". These usually include higher percentage deductions to income, etc.

[crpeck]

Do a Google search for DIF Score

the IRS has a mathematical calculation to estimate the liklihood of unreported income on a return. The components of the DIF are changed periodically depending on area of focus for the IRS or activities on a return that statistics show have a higher incidence of evasion/unreported income..... the so called "flags".

[BrianD]

Yes, "red flags" are your best chance to be audited.
For example, claiming $20,000 in contributions when you earn $30,000.