IRS Audit Tip Offs
Low gross profit margin
High auto expenses
High business use of autos
Number of Autos used in the business
High travel and entertainment
Little or no profit from business operations
High number of deductions
Estate tax return
At home office
Official documents which are incorrect
Large casualty loss deduction
The IRS.gov website claims audits are triggered by:
- Random selection and computer screening – sometimes returns are selected
based solely on a statistical formula.
- Document matching – when payor records, such as Forms W-2 or Form 1099,
don’t match the information reported.
- Related examinations – returns may be selected for audit when they involve
issues or transactions with other taxpayers, such as business partners or
investors, whose returns were selected for audit.