Brown, PC Brown, PC Tax Practice Group 888.870.0025
Call for an initial consultation
Call 888.870.0025

Does one tax audit lead to another?

In practice, one tax audit does not necessarily lead to another. Just because the IRS has conducted an audit on one year's return doesn't mean it will go back and audit your return from the year before or after that.

A new report by the Treasury Inspector General for Tax Administration (TIGTA) suggests, however, that the IRS may be doing more prior-year or subsequent-year tax audits in the future. 

According to the TIGTA report, the IRS could reach considerable amounts of uncollected tax revenue by more closely scrutinizing other years' returns filed by taxpayers who were audited.

TIGTA selected 102 audits as a sample. In all of these audits, understatement of tax liability had been at least $4,000.

The next step for TIGTA was to look at other returns from the same taxpayer, filed in other years. TIGTA found similar problems with significant understatement of tax in those years for 43 of the 102 taxpayers.

Based on this sample, TIGTA then estimated that millions of dollars in tax revenue remains uncollected every year due to understatement of tax in other years by taxpayers who have been audited.

One reason this may be happening, the TIGTA report indicated, is the widespread use by the IRS of correspondence audits. These are audits that are conducted remotely, by mail or perhaps computer, rather than meeting face-to-face.

Correspondence audits do bring in revenue. Indeed, in fiscal year 2012 the IRS sought a whopping $9 billion in additional taxes in such audits.

The question raised by the TIGTA report, however, is whether this figure should have been even more. It is therefore possible that the IRS will establish stricter guidelines for when agents who conducting correspondence audits should also review tax returns from other years.

Source: The Hill, "IRS watchdog: Agency should take second look at problematic returns," Peter Schroeder, September 5, 2013

No Comments

Leave a comment
Comment Information
Print this Page
Email Us For A Response

Request A Consultation

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Contact Information

Brown, PC
500 Main Street
Suite 400
Fort Worth, TX 76102

Phone: 817-870-0025
Fax: 817-870-0515
Map & Directions