One of the first questions many of my clients ask me is “why did I get audited?” The recent scandal surrounding the IRS and conservative groups has not helped diminish the feeling clients have that they have been unfairly singled-out. I have heard IRS officials discuss how they followed events in the newspaper to determine if a taxpayer’s return should be picked up for review. But that practice, if ever done, is so last century. Today the IRS has the internet and powerful computer programs to assist in determining if your return should be selected for an audit.
There is not much known about the breadth of the IRS’ computer tracking program. Much like the fabled DIF score, the IRS keeps their trade secrets very secret. Perhaps the NSA could learn a few secret-keeping tips from the IRS. What is known is that the IRS can cull large amounts of data from internet usage to help it perform statistical modeling of people’s behavior. This modeling is said to help the IRS target taxpayers more successfully for audits. These audits mean potential for more income, as there is believed to be a $300 billion shortfall in taxes due to tax errors and evasion. So, if the IRS sends you a letter requesting your appearance at an audit, know that they have already done their research on you. Should you desire tax council, please contact my firm, but preferably not via a Verizon cell phone. 🙂