In the past few years, the Internal Revenue Service has had several setbacks. With budget cuts and the resulting layoffs, the tax collection agency is somewhat understaffed. With fewer personnel on hand, the IRS is not able to audit as many tax returns as it could in previous years. This is good news for many taxpayers: Your chance of being audited is fairly low.
In fact, the likelihood of being audited is the lowest that it has been in 15 years. Does this mean that you can kick back, relax and forget all about tax audits? Not quite.
Low likelihood of an audit
The Wall Street Journal reports that the number of tax returns being audited is the lowest since 2002. This does not come as a surprise, since the number of audits has decreased for the past six years in a row. The last fiscal year saw only 1 in 160 tax returns being audited—a major drop from 2010, when the ratio was 1 in 90.
This figure is reassuring, but it does not mean that you are safe from an audit. The IRS still conducts thorough and often random audits. If you are selected for an audit—even if you did not make any errors on your tax return—you could be in for a stressful ride.
Surviving a tax audit
Going through a tax audit is never fun, but it does not need to be the fear-inducing experience that many people believe it is. You have a few options if you are selected for an audit. You may try to weather it yourself or seek help from a professional like an accountant or a tax attorney. Tax audits frequently have penalties like fines, and you should do everything in your power to ensure that an audit, however unlikely, works out in your favor.