March 21, 2011 12:00 am

Audits on the Rise

According to the latest IRS Data Book covering the government’s fiscal year ending September 30, 2010, the overall audit rate on individuals increased slightly to 1.1%; it had been 1% in the 2009 fiscal year. However, for wealthy individuals-those with income of $1 million or more, the audit rate rose to 8.4%, from 6.4% in fiscal year 2009.

The audit rate for sole proprietors also rose slightly. The following is based on gross receipts reported on Schedule C:

  • Under $25,000: 1.2% (up from 1.1%)
  • $25,000 to under $100,000: 2.5% (up from 1.9%)
  • $100,000 to under $200,000: 4.7% (up from 4.2%)
  • $200,000 or more: 3.3% (up from 3.2%)

Source: 2009 and 2010 IRS Data Books

Tax Glossary

Tax attributes

When debts are cancelled in bankruptcy cases, the cancelled amount is excluded from gross income. Tax attributes are certain losses, credits, and property basis that must be reduced to the extent of the exclusion.

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