I’m Being Audited Again! Can the IRS Really Audit Me Multiple Times?

On: March 21, 2024

If you have ever faced an IRS audit, then you know just how stressful it can be. No one wants to deal with the IRS, especially when they feel they are under a microscope. If you have received another letter from the IRS stating that you are being audited, you may be wondering if it is even possible. Can the IRS really audit you more than once? The simple answer is yes, they can. In fact, they could audit you every year, if they really wanted to. Fortunately, you do not have to face a tax audit all alone. Hiring a tax professional to walk you through the process can alleviate the stress you feel and help limit the chances of being audited further. How Does the IRS Know Who to Audit? The IRS does not specifically state how they choose who to audit; however, what we do know is that the audit selection process is done both at random and using a computer screening process. What this means is that some returns are simply chosen at random while others may have some red flags, which led them to be pulled for an audit. Fortunately, the IRS does not audit a large number of tax returns. In fact, out of all the tax returns filed in the US, the IRS only audits about 1% of those returns. While your chances of an audit are low, they are not impossible. What Factors Lead to an IRS Audit? The IRS has not released any type of official letter or statement that tells us what factors they use to determine whether a tax return should be audited or not. However, with that said, there are common factors that show up as red flags on tax returns and are likely to trigger an audit. Numbers That Don’t Match Errors and accidents do happen as we are all human. However, multiple errors or very large errors can be a red flag and trigger an IRS tax audit. The IRS receives information from your W2s, financial institutions, and other entities that report tax information about you. The IRS then compares this information to what you report. If there is a discrepancy, you can bet that the IRS will be in contact with you. Inflated or Deflated Numbers The IRS is likely to pull your tax return for an audit if you have income or expenses that are overly inflated or deflated. For example, if you claim that your restaurant is spending $15,000 per year on paper products but other similar companies over the years have only claimed around $3,500 in paper expenses, you can bet the IRS will catch that and question you. Similarly, if you claim a huge increase or decrease in profits or losses, you may land yourself in the audit pile. Huge or Numerous Deductions Claiming large or many deductions can lead to an audit simply because the IRS wants to make sure that you are properly claiming the deductions. I’m Being Audited Again – What Do I Do? The IRS is not limited when it comes to the number of times that they choose to audit you. This means that you may be subjected to an audit year over year. It is important to note that you cannot be reselected for an audit on an already audited tax year. For instance, if your tax return in 2020 was audited, it cannot be audited again, unless the IRS has evidence that fraud has been committed. The IRS can be difficult to deal with, especially when it seems like you are being targeted by them. It is always recommended that you work closely with a tax professional who can walk you through the audit and ensure your returns are filed properly and correctly. Let Our Team Represent You During Your Tax Audit Today Leading Tax Group is here to assist you with all of your tax questions and representation. We have the skills, knowledge, and expertise to handle your audit. We know just how frustrating it can be and our goal is to alleviate that stress and represent you aggressively to get the outcome you want. Give our team a call today to discuss the specifics of your tax audit and get the situation under control.