How Likely Are You To Be Audited?Written by Richard A. Chapo
Statistics for IndividualsUnfortunately, 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, risk of being audited on your personal return is less than 1 in 100. In regard to above numbers, it is important to note that IRS pursued a large number of “correspondence audits” instead of face–to–face meetings. As name suggests, these audits consists of correspondence being sent from IRS to a taxpayer regarding a contested issue. The taxpayer can respond to audit or pay accessed amount depending upon request of IRS. Favorable Audit News For Businesses The audit rate for businesses is much lower than those for individuals. In 2002, 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.
| | Corporations Failing To Claim AMT Exemption Overpay Taxes By $11,000Written by Richard A. Chapo
Does your incorporated business pay alternative minimum tax [“AMT]? If so, there is a 93% chance you have been overpaying your taxes by an average of $11,000 a year according to Treasury Inspector General.The Office of Treasury Inspector General for Tax Administration was created in 1999 to oversee IRS. One of duties of Treasury Inspector General is to study and report efficiency of tax payment system, particularly accuracy of tax collection efforts. Many of studies conducted by office reveal starting results, particularly when it comes to businesses overpaying their taxes. As part of this oversight, Treasury Inspector General is reporting that many small business corporations are incorrectly paying AMT. The AMT was enacted in late 1990s, but proved to be a huge burden on small businesses. The tax was confusing and paperwork was incredibly complex. An amendment was subsequently added to give small business corporations relief from AMT. Section 55(e) of Internal Revenue Code now contains language exempting small business corporations from paying AMT.
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