IRS audit
 
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Avoid IRS audits

The IRS will try to perform as many IRS audits each year as the IRS has resources for. The IRS believes that the more IRS tax audits the IRS conducts the more tax money the IRS will collect. The more money the IRS collects from tax audits the more IRS can get budget next year from Congress.

With the bigger IRS tax budget, the IRS can hire more IRS tax auditors and tax collection agents, collect more IRS tax money , increase the IRS budget again and so on. The IRS fears Congress because Congress can take away the IRS funds. Reducing IRS budget means reducing IRS power and money.

While there is no way to totally eliminate the risk of IRS audits. A tax payer can greatly reduce the risk of an IRS audit by the followings methods. Since some IRS audits are random so here are some things to do to not red flag the IRS.

Ways to reduce the chances of IRS audits

Tax payers should report all income that the IRS knows about or can find out about

Using the IRS computer system, the IRS has a tremendous ability to match income from sources the IRS knows about. Examples of sources that the IRS knows about are employers, banks, mutual funds, businesses, stock and real estate brokers. The IRS is almost always sure to catch any tax payers who fail to report income from these sources.

Unreported income is the number one target in almost all IRS audits and is the one area where tax payers should be most careful. The IRS can also match k-1 information from certain corporations, LLC, trusts, and partnerships to tax payers' personal tax return information.

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