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Tax Tip of the Week
For the week of
August 11, 2003

Be aware of a new IRS audit program

Be aware of a new IRS audit program called the National Research Program that is now underway. The program is measuring taxpayer compliance and error rates. Results will provide new benchmarks for the computer programs the IRS uses to flag returns for its regular audit activities. The good news is that the audits will be less intrusive than the line-by-line audits of ten years ago, and they should result in fewer unnecessary audits in the future.

The program is examining about 50,000 individual returns in four levels of detail.

Around 8,000 returns are being audited without the taxpayers being contacted. The IRS is using data from information returns such as W-2s and 1099s to check against filed tax returns.

Another 9,000 taxpayers can expect a letter from the IRS asking for more information on certain items or pointing out discrepancies. If you're in this group, you usually won't need to visit the IRS in person.

The IRS intends to audit about 30,000 more taxpayers, focusing on selected areas of their returns. If you're in this group, you'll have to meet with the IRS to go over their questions.

The last 2,000 will be "calibration" audits. You'll have to meet with an IRS agent to discuss each line in your return. However, you won't necessarily have to provide support for every item, so these audits may not be as bad as they sound.

If you're contacted by the IRS, call our office before you reply. We can advise you on how best to respond.




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