Many business owners ask: How can I avoid an IRS audit? The good news is that the odds against being audited are in your favor. In fiscal year 2018, the IRS audited approximately 0.6% of individuals. Businesses, large corporations and high-income individuals are more likely to be audited but, overall, audit rates are historically low.
The IRS’s staffing shortages have been well publicized and audits of individuals have decreased in the past several years. But it’s a mistake to assume that the agency has stopped scrutinizing not-for-profits and conducting audits when it deems necessary. If your organization receives an audit letter, you need to know what the process involves and how you can help resolve it as quickly as possible.
The IRS just released its audit statistics for the 2018 fiscal year, and fewer taxpayers had their returns examined as compared with prior years. However, even though a small percentage of tax returns are being chosen for audit these days, that will be little consolation if yours is one of them.