From the Tax Law Offices of David W. Klasing - 3 More Reasons the IRS Might Choose You or Your Business for a Tax Audit

IRVINE, Calif., Jan. 21, 2020 /PRNewswire/ -- The IRS audits around 1 million individual and corporate tax returns every year, and no taxpayer is too small ? or too successful ? to be targeted. From small family businesses, to celebrities, politicians, and Fortune 500 companies, no one escapes the IRS' microscope.

In our original article, we started with three common reasons the IRS will audit you:

• The IRS finds "badges of fraud" when processing your tax return. The IRS receives information that sets off alarm bells that indicate tax evasion ? for instance, information about an undeclared foreign bank account. This sort of data could come from a foreign bank or financial service that you use, compelled by FATCA or a summons; from a public source of information; or even from a tax whistleblower hoping for a reward.  Relatedly, Your tax return could score poorly on the IRS' Discriminant Inventory Function System (DIF), indicating potential fraud and thus triggering an audit ? or a criminal tax investigation.
• You operate a cash-intensive business. Cash has been historically used to mask tax evasion, therefore cash-intensive businesses (such as pawn shops and restaurants) endure intense IRS scrutiny.
• You earn a high salary or are a high net worth individual. The higher your earnings the more likely you are to be impacted by complex tax regulations ? and in turn, the more likely you are to be audited by the IRS.

Here are three more reasons to be worried about a federal tax audit this year;

• You didn't report your cryptocurrency gains. You may be required to report Bitcoin to the IRS ? which, taxpayers should be forewarned, can track "anonymous" cryptocurrency around the world.
• You didn't report your Goldmoney holdings. You should report Goldmoney holdings to the IRS if (1) you made cash transactions above $10,000, which must be reported on Form 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business); or (2) if your account meets FBAR reporting requirements, discussed in greater detail here. Failure to report income or financial accounts is a glaring badge of fraud.
• You claimed large charitable tax deductions. If your charitable deductions are higher than average the IRS is certain to take notice.

See the full version of this article HERE.

Public Contact: Dave Klasing Esq. CPA, [email protected]

SOURCE Tax Law Offices of David W. Klasing, PC