The IRS released data showing that overall audits were down in fiscal 2012 to 1.03 percent of all tax returns filed, as compared with 1.11 percent the previous year. However, audits of all types of businesses went up. Here are some highlights from the latest IRS enforcement results:

  • Audits of taxpayers in the upper income ranges remained substantially higher than other categories. For example, 0.94 percent of taxpayers with incomes of less than $200,000 were audited as compared with 12.14 percent of taxpayers with incomes of $1 million or more.
  • According to the recently released statistics, audits that are conducted by mail, called “correspondence audits,” are significantly higher than “field audits,” which are conducted in person. In 2012, there were 359,750 field or face-to-face audits, as compared with 1,122,216 correspondence audits.
  • The IRS increased examinations across all categories of business returns in 2012, as compared with the previous year. Specifically, 0.48 percent of Subchapter S corporations were audited, as compared with 0.42 percent in fiscal 2011. Partnership audits were conducted at a 0.47 percent rate, as compared with 0.40 percent the previous year.
  • Small corporation returns (with assets under $10 million) were audited at a 1.12 percent rate, as compared with 1.02 percent the previous year. Nearly 18 percent of large corporations (with assets of $10 million and higher) were audited. The very largest corporations with assets of $250 million or more had a 29.41 percent audit rate, as compared with 27.6 percent in fiscal 2011.
  • For tax-exempt organizations, 1.34 percent were audited, compared with 1.36 percent the year before.

Levies, liens, and seizures were down in fiscal 2012, as compared with the previous year. In criminal tax cases, the IRS had a 93 percent conviction rate on prosecutions it recommended. The average sentence for criminal tax and tax related cases was 32 months, compared with 25 months the previous year.

 

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– content reprinted with permission from BKR International.

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