Michelle Yeoh in “Everything Everywhere All at Once.”

Source: imdb

Tax audits are rare

Tax audits have been a hot-button political issue since the Inflation Reduction Act, passed in August, allocated $79.6 billion to the IRS over the next 10 years, with more than half of the funds earmarked for “enforcement.”   

But audits have been rare, according to Ryan Losi, a certified public accountant and executive vice president of CPA firm Piascik. “I have maybe two or three a year, and that’s with 600 clients,” he said. 

Indeed, the IRS audited 3.8 out of every 1,000 returns, or 0.38%, during the fiscal year 2022, down from 0.41% in 2021, according to a recent report from Syracuse University’s Transactional Records Access Clearinghouse.

Typically, the IRS uses software to assign a numeric score to returns, and when the rating is high enough, it may be flagged for an audit, explained Michael Prinzo, managing principal of tax at CliftonLarsonAllen.

“It’s compared to a general population of other returns with similar income or deductions and when there’s an outlier or a number of outliers, it increases the likelihood that one might receive an audit notice,” he said.

Most audits occur by correspondence

Post source: cnbc

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