Discussion:How Many Audits Did You Have in 2006?
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Discussion Forum Index --> Tax Questions --> How Many Audits Did You Have in 2006?
| NAME | TOTAL 2005 RETURNS | AUDITS IN 2006 | CP-2000 NOTICES | STATE NOTICES |
|---|---|---|---|---|
| DZCPA | 1200 | 3 | 10 to 15 | ? |
| PJLCPA | 1100 | 3 | ? | ? |
| Smokeytax | 150 | 0 | ? | ? |
| 1040man | 150 | 0 | ? | ? |
| rgtaxservice | 181 | 0 | ? | ? |
| sea-tax | 550 | 0 | ? | ? |
| Death&Taxes | 450 | 1 | ? | ? |
| Deb | 736 | 0 | ? | ? |
| Gmikeg | 50 | 0 | ? | ? |
| Mustu | 250 | 0 | ? | ? |
| Ztom | 980 | 0 | ? | ? |
| LPKCPA | 125 | 1 | ? | ? |
| Cttax | 1000 | 1 | ? | ? |
| JR1 | 250 | 1 | ? | ? |
| Kathyt | 600 | 1 | ? | ? |
| KL | 1300 | 3 | ? | ? |
| Sw | 315 | 0 | ? | ? |
| Jodie | 650 | 2 | ? | ? |
| Tilt53 | 827 | 2 | ? | ? |
| EAPHD | 1200 | 10 | ? | ? |
| FlaGators | 60 | 0 | ? | ? |
| www.cpa1.biz | 10 | 0 | ? | ? |
| Brensan | 250 | 1 | ? | ? |
| PVVCPA | 265 | 1 | ? | ? |
| Kevinh5 | 407 | 0 | 4 | 5 |
| Dhtax | 145 | 1 | 6 | 1 |
| Lizzit | 238 | 0 | 0 | 1 |
| Dusty | 450 | 0 | ? | ? |
.
| 29 December 2006 | |
| How many audits did you have on Individual tax returns you prepared in 2006? No CP 2000 or line item audits. You know... the full blown type, field or correspondence. Just the major stuff accountants dread. Not bragging...just good info to let the preparers know whats REALLY happening with all those RED FLAGS! (You can add your name or fake one if you wish to list by using the edit this page feature on top of screen.) | |
Michaelstar (talk|edits) said: | 29 December 2006 |
| I had one full audit (1040) and it was for a client that I did not prepare the return being audited. I was successful in defending this client on all major issues questioned by the IRS. This individual is no longer my client as I do things differently and will not comprise my standards for an one client. | |
| December 29, 2006 | |
| Tax returns prepared - 736, audits - 0. The last audit I had in an IRS office was in 1996 and about four or five in the 20 years before that. I don't remember any major changes made to any of those audits. Most, if not all, resulted in no change. | |
Www.cpa1.biz (talk|edits) said: | 29 December 2006 |
| First I need a tax return...... | |
| 29 December 2006 | |
| As a now retired in pvt practice, 30-yr veteran of IRS enforcement programs: usual audits, criminal prosecutions, Wage/Price Stabilization of the early 70's, through large case (Fortune 500), and yes, we needn't mind some audits, and if no or small change, the practitioner job is being done for all clients. If none or a few audits of note, it can be really low coverage rates, and the practitioner job can still be properly done. Within any level of Congressional funding, IRS at least feels it knows what it's doing to get the major bucks.
And, hey, what's this RED FLAG stuff? IRS don't deal in no red flags, per se. A proven bad way to manage audit selection programs, with around 140 million annual return filings, and less than 100,000 IRS employees, the minority of whom are engaged in actual line enforcement. For about 6 years, I managed the program for an Area Office which selected returns for exam. It's a fancy statistical method not necessarily having all that much to do with size of discrete line items. Targeted programs fill in the voids, but (excepting EIC/dependents and 1099 match), they are typically a minor part of the process. Dependent again upon Congressional funding, where if enforcement staffing has to shrink, "must work" can tie up available staffing. It thus follows that vast differences in regional compliance can dictate staffing available to do "regular" audits and hence apparent (and often real) coverage. Congress also tends to get into this act where any key Member abhors excessive coverage at home, despite IRS stats which may dictate it should be so. It's a really fascinating process to have seen it from the inside. Having taught several multi-regional, managerial classes, it's interesting how enforcement philosophies of IRS managers about the diverse U.S. can vary also. Though IRS has over many years has sought to centralize many things in one place for good or ill, "all tax enforcement is local." From regions down through small, IRS sub-office. Fred F. | |
| 29 December 2006 | |
| Tax returns prepared, around 150. Audits, none.
Smokeytax | |
Death&Taxes (talk|edits) said: | 29 December 2006 |
| Sorry, DZ, but I mentioned my result in another discussion. For 2006, the year audited was 2004 and of the 450+ individual returns prepared, there was one audit the circumstances of which were mentioned at that other discussion where the dread 'red flags' came up. Let's face it, for people who are employees, the AMT has rendered auditing a zero sum game for IRS except for two areas: charity and 'is this interest deductible?' From discussions here, the latter issue seems rarely addressed by the Service, though we hear warnings that it will be. So many areas are covered by CP-2000 requests. Anyway, do we really ever expect to hear Commissioner Everson say, 'taxpayer behavior has been so good that we are cutting back on the examination process?' | |
| 29 December 2006 | |
| Tax returns prepared, around 150. Audits, none. In fact: Over the past 30 + years of tax prep none of my clients have ever been audited. 1040man | |
Rgtaxservice (talk|edits) said: | 29 December 2006 |
| Tax returns returned, 181. Audits...none.
| |
| 29 December 2006 | |
| For 2004 over 550 returns personal and business - 1 audit but I did not do the return I represented an indiviual who did their own return. | |
| 29 December 2006 | |
| hehe cpa.biz.....guess that is a qualifying question, no? | |
| December 29, 2006 | |
| Trying to figure out how to get rid of the dots and use tabs instead (or tables--I suppose HTML would work). Can't find it. Happy New Year to you and everyone, too! | |
| 29 December 2006 | |
| Prepared 50: OOOOHH! (first year in business full-time), 0 audits - but that's not saying much, I'll let you know in three years...Actually, my forte is representation, so I get Lots... | |
| 29 December 2006 | |
| Total prepared - 250 with 0 audits. Only 1 audit in 10 years of practice. | |
| 29 December 2006 | |
| Hi
New to this. But learning alot. Here in Nebraska we are having more audits than ever. In my firm we have three preparers and did about 6 audits. Most of the other people I have talked to have done as many or more. The midwest must be in a audit mode | |
Www.cpa1.biz (talk|edits) said: | 29 December 2006 |
| DZ,
Numbers Talk! Thanks for the inspiration of not being so scared by the quanity of tax returns we prepare and if they will be audited. Bj | |
| 30 December 2006 | |
| Two, both by Revenue Agents including one on a high income non-filer. | |
| 30 December 2006 | |
| I haven't had a TCMP audit since 1988. And that one was a complete waste of time for IRS -
TCMP on Sub S, sole shareholder, single taxpayer, living in his brother's home. Loss on Sub S was the ONLY item on shareholder's tax return-maybe a small salary-under $ 5,000. IRS wasted over a week's time in checking stuff out - and all it could come up with was a depreciation adjustment - which even after adding the full amount back to shareholder's taxable income - still produced a -0- change to the return. | |
| December 30, 2006 | |
| I've made this a table... let me know if this is too confusing.
| |
| December 30, 2006 | |
| Thanks, Tim! I hope I didn't mess you up a few minutes ago, when I was editing the above at the time you were making the table. And thanks for adding the Add/Edit This Table link. | |
| December 30, 2006 | |
| No, there were two edit conflicts when I was trying to save, but I fixed it. :-)
I tried to add the table here on this page, but it interfered with the templates which format the replies (who said what, date, and the blue border), so I created the table on another page and just told the system to plot it at the top of this page. | |
| December 30, 2006 | |
| Personally, I think the comments should stay in the message portion of this page and left out of the table at the top of the page. | |
| December 30, 2006 | |
| Deb: Feel free to edit the table - it's pretty simple.
| |
| 30 December 2006 | |
| PJLCPA: 1100 returns in SD?? You must have every return in the county if what I hear about the Dakota census figures is correct. :) | |
| 30 December 2006 | |
| So far..4,817 returns 7 audits. = Less than 2/10th's of a percent. (.00145) | |
| 30 December 2006 | |
| Very interesting. I wonder the percentage of these preparers are located in the Southern US. I know they were picking on the South, and California for a long while. Sched. C's, less than 100k. | |
Death&Taxes (talk|edits) said: | 30 December 2006 |
| There are several other reasons for the small percentage of audits besides AMT: Passive loss rules for what were once high income returns but now are upper middle-class are also zero sum audits from the Service. Audit something where you cannot collect money in the here and now because income was over 150K? Another change from 25-30 years ago is the explosion in S Corps and MMLLCs; this trend shifts audit exposure of an individual to a backwater. In twenty-five years, I have only seen two Schedule D audits; IRS has never seemed to have the patience to sit through examining broker advices to corroborate costs of stock, and now with many brokerages providing their own schedules, probability is even less, though I will say this year saw four CP-2000s on missing Sch D information. I ask DZ whether he thinks it was always this way, or what factors he thinks have lowered audit percentage. I can recall being one of three preparers with a tax lawyer in the eighties. Output exceeded 1500 returns a year, all done by hand. We kept an ex-IRS man very busy with audits, in addition to which I would regularly have five or six working at one time, but half of these being tax shelters. | |
| 30 December 2006 | |
| D&T, Less audits now than before due to 1) better IRA matching program 2)budget cuts 3) AMT takes all the fun out of for IRS 4) I truely believe they audit non professional paid prepared returns 10 times more likely. (Does anyone have stats on this??) | |
| December 30, 2006 | |
| I agree, DZ. I think there have been more CP 2000s sent out due to better IRS matching programs since the mid 1990s, I think the IRS had more budget cuts beginning in the mid-1990s, and I believe many more tax preparers began using software to prepare tax returns since the late 1980s and early 1990s (when efiling became popular). I don't have any stats for self-prepared returns, but I wouldn't be surprised if they are more susceptible to audits. | |
Death&Taxes (talk|edits) said: | 30 December 2006 |
| I trust your assumption about self-prepareds, DZ, and believe even those self-prepared returns via software are part of that group. "Michael, thanks for last year's Turbo Tax. Now what were those other taxes you deducted on Line 8?" "That's the money I had to pay IRS last year." Same man had 7.5% of his home on Form 8829 and 100% on Sch A.....Of course the 7.5% was in the left column of 8829. One of the oddities about software programs for the masses is that they have been dumbed down the last few years, probably to try to prevent mistakes like that. | |
| 31 December 2006 | |
| I am entering my 3rd year in business. (And I am located in the Southern US) One of the first returns I prepared in my first tax season in business for myself, is now under audit. This is also my very first IRS audit. The Schedule E triggered the audit due to $25k in rental real estate losses. The expenses were all legitimate and have been substantiated. In total I have prepared about 125 tax returns and have this 1 audit to my name. | |
| 31 December 2006 | |
| About 1000 each returns in 2004 & 2005. 1 audit, no change. Many CP 2000 letters, mostly for items clients didn't give me or they "forgot." | |
| 2 January 2007 | |
| A little over 600 returns in 2005; 1 audit. This is actually my first audit in about 10 years. | |
| 6 January 2007 | |
| Thank You for all who included the info in the chart above. Helps us all realize that audits are indeed, a very rare event! | |
| January 6, 2007 | |
| So for the list above, I show a total of 9,387 returns and 14 audits, making the percentage of returns that were audited to be about 0.15%. | |
| 6 January 2007 | |
| I completed 550 1040's and had 2 formal audits. The agent came to my office (rather than me to IRS), very thorough, friendly, reasonable and both resulted in no change. Less than 1% audited. 100 corp/scorp/llc's and zero audits. | |
Death&Taxes (talk|edits) said: | 6 January 2007 |
| Hey, Jodie, you raised our average! :) | |
| January 6, 2007 | |
| Just like a client, comes in with add'l info after the work is done.... :) | |
Death&Taxes (talk|edits) said: | 6 January 2007 |
| It's obvious, Ken or Karen Lurker. Someone must have understood Tim's instructions for posting directly. Wesley Snipes? | |
| January 6, 2007 | |
| No, KL is DZCPA's partner...
- Tim Doyle, TaxAlmanac Moderator - Talk to me 14:24, 6 January 2007 (CST) | |
| 7 January 2007 | |
| Approx 60 returns, mostly individual, some corporate - doing it as moonlighting for a little while longer before I have guts to go at it 100% of time. No audits. | |
Death&Taxes (talk|edits) said: | 7 January 2007 |
| "Speaking of DZ, has anyone looked at his user page recently?" Deb, how does he avoid getting beaten down by client abuse? Or perhaps is he the reverse of Dorian Gray? | |
| 4 March 2007 | |
| Can we add a column for CP-2000 notices? I believe the IRS is using its computer matching as a type of audit now, and to the client, any time the IRS questions a return, it is an audit. So we should have one column for actual audits (IRS office or our office or client's place of business) and another for these correspondence type audits.
I believe the numbers would be vastly different and be more reflective of the step up in enforcement efforts by both the IRS and the various states. | |
| 4 March 2007 | |
| Couldn't figure out how to edit the table directly, so here goes:
145 returns, 1 IRS audit (still not resolved, of an MBA student who deducted her tuition -- definitely a red flag audit), about 6 CP 2000s (mostly wrong) and one state MA random compliance audit. | |
| 5 March 2007 | |
| Mine includes state returns and past-year returns completed in 2005. I did take on a number of clients who came to me with CP2000 notices, but none recieved one for work I had done for them. No state equivilent CP2000 notices were recieved, but I just got one from CA for returns done last year. The person doesn't live in CA, the return's address was not CA; they issued this based on the fact that the 1099 had a CA address. This is really annoying - loads of banks and securities companies in the US will not take on an account unless a state-side address can be provided. If CA's going to do this for every person who is forced by their bank to list a US address (depsite not ever having lived in CA ever), then we should clearly tell clients to choose a non-CA address when selecting that address. | |
| 22 March 2007 | |
| CP2000 are almost always matching errors. Income left off returns. They are computer generated and have little to do with dissallowed deductions. The usually are due to taxpayer's leaving off info from return. Stats on that are useless other than showing how well the IRS can match income info to the return. | |
| 22 March 2007 | |
| Since I don't have the tax practice, I don't have the exposure for the audit. However, I have been the one getting ready for the audit. Two S-Corps over the past seven years. That's it. No individuals. Have had the CP 2000 show up because a client forgot to give us a W-2. I should be getting one myself this year because I forgot to include the distribution from my husbands IRA so we could build our house...FUN FUN FUN... | |
| 22 March 2007 | |
| DZ, I have to disagree. Not all audits are about deductions. Many are about unclaimed income, and that is exactly what the CP-2000 matching notices focus on. In the taxpayer's eye, that IS an audit. | |
| 22 March 2007 | |
| In our retail locations we do around 6000 1040's a year and have had no examinations during the last 5 years. We have a fair number of adjustments due to client ommisions or the dreaded who gets to take the child question. In the CPA practice we had one CID examination. There was a red flag in that the client failed to pay the payroll tax trust balances. We picked up the 1120 only when the entity was on its last leg. We had relied on the audited (publicly traded)trial balance to prepare the return and the whole thing was put to bed after two days in the Local office. | |
| 22 March 2007 | |
| Kevinh5, I disagree. I'm not talking about notices correcting math or omission errors regardless what the client thinks. You are correct, the IRS calls thoses AUDITS (did not 10 years ago). We are talking about the OTHER kind of AUDITS. There will allways be math/ommission errors. clients forget stuff. | |
| 22 March 2007 | |
| About 50 returns in 2004, 100 in 2006, and over 120 already in 2006. I expect to prepare about 180 returns this year. I had my first audit for a client in Dec 2006. | |
| 22 March 2007 | |
| Oops, all numbers are messed up.
About 50 returns in 2005, 100 in 2006, and over 120 already in 2007. I expect to prepare about 180 returns this year. I had my first audit for a client in Dec 2006. | |
| March 22, 2007 | |
| 265 returns signed by me for 2005.
I am currently in the process of one 2005 IRS audit due to a Schedule C that had a high amount of gross revenue. Even though their net income was $160K. I am in the process of closing one 2003 audit from CA FTB on a sale of residence. The client had fully utilized the Sec 121 and still had gain. FTB wanted a copy of the Form 2119 from the year of purchase (1994) and verification of the $125K of improvements. | |
| 22 March 2007 | |
| 355 1040 returns in 2005 and about 75 corporations - 0 IRS audits -
Have had a few CP2000 notices regarding information the client had not provided ("Oh yeah I did have about $200,000 in stock sales last year....")I don't think any of those were from last year though. I had one client who was in an audit regarding his father's estate, but I was not involved -his deceased father's accountant was dealing with it. I've had 4 sales tax audits for the State of Florida - those are a nightmare - | |
| March 22, 2007 | |
| Ztom - Your name has already been listed in the chart for 980 returns. | |
Tcaccounting (talk|edits) said: | 22 March 2007 |
| 86 returns, 0 audits, although I just got a call today from a client who had an IRS agent show up, unannounced, at his house to do a payroll tax audit on his LLC/S-Corp. | |
| 22 March 2007 | |
| 150 returns in 2006 (personal). 1 audit from 2004 - the only reason he owed anything on that is because he told me after the fact that he "mistakenly" overstated his wife's realtor expenses by 50% - in the middle of the audit.
Only about 3 CP-2000 notices. | |
| 7 June 2007 | |
| More audits to come, promises IRS | |
| 15 June 2007 | |
| 13,000 random audits = about 260 per state. Looking forward to October IRS notifications. Audits are up this year with my clients so far. 5 this year versus 3 in 2006. Lots more CP 2000 requests. Most of them are for stock sale activity left off returns in error. | |
Death&Taxes (talk|edits) said: | 15 June 2007 |
| And the CP-2000s are getting earlier so that clients were getting them in March this year. | |
| 15 June 2007 | |
| I'm afraid to respond...as I might jinx myself! My better half and I prepare approx 400 individual returns, 200 Corps (mostly S) a bunch of partnership and fiduciary returns and a handful of 5500's. We also prepare quite a few non resident returns and 1120F's. The last "full blown" IRS audit we had was in 2000...they were checking on an S Corp return that had a fairly significant shareholder change in 1998 (yes, a stock sale - not a sale of assets...don't ask!)..they picked up on some transaction costs that we should have capitalized but they decided to pass on adjusting. Other than that we have had a few run ins over the past several years from the International folks checking out our transfer pricing methodolgies and a few looking at some 1120F's but, knock on wood, no changes/assessments yet. New York State on the other hand....DON'T GET ME STARTED. They've been brutal...STUPID brutal... to the point of incompetence. Oh. darn it...phone just rang...hope it isn't the IRS! | |
| 16 June 2007 | |
| One audit in 7 years. Amazing. Lucky here in California..State rarely audits. They just go along with IRS audit changes. Seen zero state audits in past 20 years with over 20,000 returns prepared. | |
Www.cpa1.biz (talk|edits) said: | 16 June 2007 |
| When you get audited from the IRS and they make changes, how does the state react to that. Does the taxpayer say something or does the state automatically get notified. | |
Death&Taxes (talk|edits) said: | 16 June 2007 |
| you do your client a service by notifying the state since interest, and potential penalties, continue to run. Our resident experts from California and New York can explain their rules, which I believe are much stricter than others, but you must also remember there are states where Federal audit changes mean nothing. These are states that base tax on AGI or gross income and where the adjustment is to itemized deductions. | |
| June 16, 2007 | |
| The IRS automatically notifies the states. In Michigan, after six months, the taxpayer will receive a bill from the State of MI, so it's best to prepare an amended return with the state after an IRS audit. | |
