Statistics for Individuals Unfortunately, the IRS increased its rate of auditing individuals in 2003 when compared to 2002. The increase was approximately 14%, but still constituted only 6.5 audits for every 1,000 taxpayers. Put another way, the risk of being audited on your personal return is less than 1 in 100.
In regard to the above numbers, it is important to note that the IRS pursued a large number of “correspondence audits” instead of face–to–face meetings. As the name suggests, these audits consists of correspondence being sent from the IRS to a taxpayer regarding a contested issue. The taxpayer can respond to the audit or pay the accessed amount depending upon the request of the IRS.
Favorable Audit News For Businesses
The audit rate for businesses is much lower than those for individuals. In 2002, the IRS audited roughly 2.2 out of every 1,000 businesses. In 2003, this rate dropped slightly to 2.1 out of every 1,000 businesses.
The IRS has attributed the decline in business audits to the “explosive growth” in tax shelters, which requires the Agency to pursue more expensive and time consuming audits due to the complexities involved in the plans. The Agency reported pursuing more than 2,200 such shelters in 2003, which the audits taking an average of 7 1/2 months longer than normal corporate audits.
Audit Risk
Whether you are a business or individual taxpayer, your risk of being audited is very low. The nominal risk, however, is not a license to pursue frivolous deductible claims on your returns. As long as you stick to valid deductions, you should be able to sleep without much concern.
New Law Alters Highway Use Tax Regulations: Installment Payment Option Removed
The IRS has announced significant changes to the federal highway use tax regulations, impacting truckers and owners of heavy highway vehicles. As part of the American Jobs Creation Act of 2004, the option to pay the highway use tax in installments has been eliminated. This change affects filers of Form 2290, Heavy Highway Vehicle Use Tax Return, starting from the tax year beginning July 1, 2005, and ending June 30, 2006.
IRS Approves 2006 Toyota Highlander Hybrid for Clean Fuel Deduction
The IRS has officially recognized the 2006 Toyota Highlander Hybrid as eligible for the clean-burning fuel deduction. This means that taxpayers who purchase this hybrid vehicle new in 2005 can claim a tax deduction of up to $2,000 on their Form 1040.
Gambling Income and Expenses - Taxes
Gambling income encompasses a wide range of winnings, including lotteries, raffles, horse and dog races, and casinos. This income also includes the fair market value of non-cash prizes such as cars, houses, and trips. Understanding the tax implications of gambling winnings and losses is crucial for accurate reporting and compliance with IRS regulations.
