Tuesday, July 1, 2014

#IRS Audit Update

Here are a couple of notes from the #IRS audit front lines for the first half of 2014:

1. IRS auditors are focusing on particular industries and work groups, accumulating a lot of data that they can use in other audits in the same industry. 

2.Auditors are more interested than ever in your "monetary lifestyle", and how that lifestyle compares to your stated deductions.

3. IRS auditors are more anxious to close out your case, good or bad, than ever before. 

Lately we've read a lot in the press about the shortcomings of IRS spending on technology and staff. The IRS countered with some great data mining and sharing of information on the local level. For example, here in central and south Texas the IRS is focused on audits of oil field services, drilling operations and landowners in the #EagleFord area. Databases and other informal information on say, oil field truck drivers, is shared among the local audit group. Financial profiles quickly emerge; information on a particular company's reimbursement policy is documented; job profiles emerge;  norm is established.

Auditors are using taxpayer prepared budgets to compare to the taxpayer's prior returns. The auditor then compares the budget expenses with the return expenses, and then with "lifestyle acquisitions" such as cars, boats, or houses, even the number of children in the household.

Finally, auditors are more anxious than ever to close out your cases - good news if you're prepared, not so good if you're not prepared.

Call now if you need help planning for your #IRSaudit. We have offices in Austin and San Antonio and will meet with you personally to discuss your situation. Contact Austin and San Antonio tax attorney Martin Cantu for assistance.