I'm pretty sure the majority of audits are handled by old fashioned correspondence; no auditor plane tickets involved.
If you are talking about the NRP audit, the point is not to get anything. It is to develop algorithms to determine the future of who are the fat targets.
I'm pretty sure the majority of audits are handled by old fashioned correspondence; no auditor plane tickets involved.
Honestly I have no idea why they waste money doing that. If the goal is to reclaim the most amount of tax revenue with the least amount of investigation I'd go about it all different.
I'd look at your current assets: house, car, stuff as well as big expenses: vacations, jewelry, etc and then look at your stated income. If it fell within some reasonable range, I'd move on. If it didn't I'd dig a bit deeper.
Getting 700-800$ out of people probably costs thousands (the plane ticket for the auditor is probably more than 700 ).
If I walk into your 3m$ mansion and see a 35k tax return with no investment income... Well... That requires some explaining . If you live in a 300k house and paid 50k in taxes , spend 50k a year in expenses and have 5k in deductions and contributions... Is getting that 10$ error really worth it?
I suspect it's because auditors are evaluated in their precision and not their value... So maybe an incentive problem.
When I do my taxes they are sometimes very messy (e.g. right no I live overseas and own a rental in CA which having stock options vest). I'm SURE I made a mistake on my taxes... In fact I got a refund from CA last year because of a reporting error so you can imagine... Getting money from CA is like blood from a stone . So I try to fall within somenband of reasonability (I.e. look at what my tax bracket is and make sure my actually paid taxes are within reason). I suspect my return raises every flag there is but if you ask me in 3 years why I withdrew 2000 rmb in Shanghai on August 13th I'd have no clue and no way of finding out
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I'm pretty sure the majority of audits are handled by old fashioned correspondence; no auditor plane tickets involved.
If the link about the NRP is correct, last year's batch of notifications is probably going out now. Here's to hoping we all don't win this lottery this year.
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Are the NRP Audits still happening or was it for a specific time frame?
I tried searching for the answer, and there is very little information about this program. Congress and the IRS keep messing with it.
It looks like, from the last info available, they went from an "every three year" deal to every year, dropping down from 50k forms to 13k forms.
I'll assume it is still going on. Your chances of getting it are low, but not zero.
Also unclear is how many of the 13k are just desk checked, and how many go the whole way.
As long as they let me spend my Roth money without re-taxing it, but I'm not sure how that would look in a law that's supposed to be a simplification.The Fair Tax would do away with this worthless bunch of workers.
I'm not sure my approach would be to hire anyone if I was unlucky enough to get NRP'ed. It's not like they're going to find anything to throw me in jail for...maybe I'd pay some extra taxes over what a CPA would have done, but probably much less than I'd pay a CPA. This way, the threat of going back 3 years would have less punch. I'd just walk in with the shoe box and say "ask away", and whatever I couldn't produce then or after however long they give me, I'd get dinged for. Big deal. It's only time, which I have plenty of since I'm retired. Maybe there's a flaw in this approach?yeah NRP audit real unfun affair I felt like al Capone, lost sleep , found cpa he told me not to worry, I felt much better, after I hired him I didn't even get letters he got them, I just wrote the checks.
My understanding (and this was talking to the guy 30 years ago) is that every one picked is audited in person.... even the 1040EZ....
I don't think the NRP existed 30 years ago, so that info might be referring to a different audit program.
I've been audited twice in my life, and both were conducted by correspondence (snail mail). Both were very simple and direct, although they took several months before I got the final "Never mind" letters.