How Likely Is It I’ll Get Audited?

Believe it or not, the IRS does actually a significant number of returns. The common rumor is that the IRS audits fewer returns than you might think. However, the IRS generally audits tax returns six times more than is reported.

The IRS reports auditing roughly a million taxpayers every year, (approximately 0.7% of all tax returns). Millions of additional tax returns are subjects to automated audits as well, boosting the chance of getting audited to 1 in every 23 returns. This may not be a full audit, but some challenge of the information reported.

One reason the audit rate is misrepresented is due to the fact that the IRS has many verification methods for ensuring accuracy of returns. They can also assess , taxes, and interest to inaccurate returns. The IRS uses computerized algorithms and filters to verify many more returns than traditional audits.

Example: The IRS conducted 1.56 million audits in 2011, though another 11 million additional returns were audited using automated programs. The IRS will continue to use similar programs for the 2018 tax season.

Automated auditing and earlier deadlines for the reporting of necessary documents by employers means the IRS can easily match the information provided on the tax return with the reports on 1099s and W-2s. If something doesn’t match up, the IRS will request explanation. The 2016 tax season saw approximately a million audits, but over 3 million requests for explanations regarding mismatched information. These are called CP2000 notices.

Though this extra request for information technically isn’t an audit, it comes across as one to many taxpayers who receive a letter questioning their tax return.