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Tax Audits




IRS Focusing on Audits of S Corporations.

The IRS has known for years that S corporations are sometimes used to circumvent federal income and employment taxes. Despite this, relatively few S corps and shareholders have been audited in recent years. However, things are changing. The IRS has announced that the number of S corps has "exploded" in the last 20 years and it plans to increase scrutiny of businesses that operate this way. In other words, S corps and their shareholders are no longer flying beneath the IRS radar.

IRS Attacks High Income Taxpayers

If you're a high-income taxpayer, the IRS has its audit antennae focused on you.

The number of audits of taxpayers earning income of $1 million or more jumped 33% to about 17,015 audited returns in the fiscal year ended Sept. 30,  2006up from 12,835 such audits a year earlier. That amounts to about 1 in every 16 U.S. millionaires, Mark Everson, the IRS commissioner, said in a telephone news conference Monday.

Taxpayers with income of $100,000 or more (including millionaires) faced 257,851 audits, up from 219,208 a year earlier, representing almost 2% of all such returns.

Overall, audits of individual taxpayer returns jumped more than 6% to about 1.3 million audits in fiscal year 2006, from about 1.2 million a year earlier. The IRS fiscal year ends Sept. 30, 2006

That's less than 1% of all filers.

For the individual filers audited, about 990,700 were correspondence audits, and about 303,000 faced in-person audits.

Virtualex.com Ronald J. Cappuccio, J.D., LL.M.(Tax) 1800 Chapel Avenue West Suite 128 Cherry Hill, NJ 08002 Phone:(856) 665-2121      Fax: (856) 665-9005 Email: ron@taxesq.com

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