Just recently, the IRS already issued its annual data which gives an inside look at the statistical information on their activities from October 2015 to September 2016. In here isdata regarding taxes collected, returns files, taxpayer assistance, budget and workforce of the IRS, and their enforcement activities.
Among the ones listed, people are interested to know about the tax returns that were examined or audited by the IRS. Some are wondering if there really is a need for them to invest in tax audit insurance just in case the IRS decides to conduct an audit.
For the fiscal year of 2016, IRS reported a revenue of $3.3 trillion and were able to process returns of 244.2 million as well as supplemental documents. How likely will an individual or business be audited?
The IRS examinesd.06 percent of the returns filed for fiscal year 2015. For individual income tax returns, 0.7 percent were the subject of audit for calendar year 2015 while 1.1 percent of corporation income tax returns were audited, excluding the S corporation returns.
For fiscal year 2016, 36.7 percent out of the 1,034,955 who filed for individual income tax returns were chosen for examination. However, only 23.6 percent of individual audits were done by tax compliance officers, tax examiners, revenue officer examiners, and revenue examiners. For business returns with a gross receipt of $100,000 to $200,000, 2.2 percent were audited in fiscal year 2016, a decrease from the 2.5 rate in fiscal year 2015. From the business returns with gross receipts of $200,000 or more, 1.9 percent were audited for fiscal year 2016. Audit rate for returns of positive income of $1 million or more for fiscal year 2016 was 5.8 percent.
As shown by the story above, audit can happen to any person or business entity should IRS deem as necessary. For those who are wondering if there is a need to purchase a tax audit insurance, it won’t hurt to protect yourself from possible audits from the government. It’s an extra assurance that you will be covered for related fees in case this should happen to you.