If you’ve ever been audited by the IRS, you might be wondering if they can audit you again this year. After all, shouldn’t they have to skip a year and give someone else a turn?
The short answer is that you can be audited multiple times, even for consecutive years. However, before you panic and begin dreading a repeat of what happened last time, there are legal rules the IRS has to follow. In this article, the tax professionals at Levy & Associates Tax Consultants share their insights.
Understanding how the IRS identifies a lucky audit recipient can go a long way toward helping you avoid the experience. Though some tax returns are randomly selected for an audit, the majority of taxpayers who receive an audit have something suspicious in their return that serves as a red flag, triggering a closer inspection.
The IRS won’t give up its exact audit formula, but surefire triggers include:
1. Reporting income or expenses that are well outside of national averages. Remember, the IRS has data from millions of returns over decades. They can employ statistical models down to how much money a restaurant with four locations and 90 employees spends on paper products, for example.
2. Drastic income changes. If your revenue suddenly takes a nosedive, the IRS is sure to notice and will scrutinize your itemized deductions.
3. Mismatched numbers. The IRS can reconcile information from W2s and 1099s. If there’s a discrepancy, you’re likely to be chosen for an audit.
The IRS is not limited to the number of times they can audit you. If they decide that they want to audit you every year for the rest of your life, that’s in their power, absent and proving that a rogue IRS agent has a personal vendetta against you.
The only real limitation here is that a tax return from a given year cannot be audited more than once. So, for example, if your 2020 return was audited, the Internal Revenue Service cannot commit double jeopardy and audit it again unless there is evidence of fraud.
An exception to this rule is that you, as the taxpayer, can request that the IRS does another review of the return. The IRS may also notify you in writing that they need to inspect a return further.
There is typically a three-year time limit on how far back the IRS can go to audit your return, but if there is suspicion of fraud or tax evasion, that statute of limitations does not apply.
If you’ve already been audited once before and the IRS continues to target you, there’s not a lot you can do except cooperate and give them what they need. However, that doesn’t mean you are without options.
If you were recently audited, and the IRS is attempting to dig into your records again in a subsequent tax year, one course of action is to request that the IRS discontinue the audit. You could be successful in avoiding an audit if you can show that you verified the item that the IRS is questioning in a previous audit.
Whether you are interested in avoiding a future audit or need help with a current one, Levy & Associates Tax Consultants can help. We provide tax help and legal representation in over 40 locations in the United States, helping clients navigate complex tax laws. For a free consultation, contact us at (800) TAX-LEVY.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.