Los Angeles California Tax Attorney Blog
IRS Tax Audit Rate Increase for Los Angeles area Taxpayers and Businesses.
Long Beach Tax Attorney -The IRS continues to make strong progress in a number of key tax collection, IRS tax audit and tax enforcement areas. Taxpayers in the Los Angeles area including Pasadena, Long Beach, Sherman Oaks, Woodland Hills, Santa Monica, Redondo Beach, Torrance, Gardena, Santa Ana, Irvine, Anaheim, El Monte and Palmdale received more IRS Tax audit notices than in prior years.
The IRS tax audit, tax collection and IRS tax enforcement efforts increased again last year. IRS audited 84 percent more returns of individuals with incomes of $1 million or more than during 2006. Overall, IRS tax enforcement revenue reached $59.2 billion, up from $48.7 billion in 2006 and nearly $34.1 billion in 2002.
Highlights of the enforcement and services numbers for fiscal year 2007, which ended on September 30, include:
Individuals
IRS Tax Audit rates increased in 2007, both for overall individual rates and for higher-income taxpayers.
Tax Audits of individuals with incomes of $1 million or more increased from 17,015 during fiscal year 2006 to 31,382 during fiscal year 2007, an increase of 84 percent. One out of 11 individuals with incomes of $1 million or more faced an audit in 2007.
Overall, the total individual returns audited increased by 7 percent to 1,384,563 in 2007 from 1,293,681 in 2006. That’s the highest number since 1998.
Audits of individuals with incomes over $200,000 reached 113,105 returns, up 29.2 percent from the prior year total of 87,885.
The IRS increased audits of individual returns with income of $100,000 or more, auditing 293,188 of these returns in 2007, up 13.7 percent from last year’s total of 257,851.
The IRS filed 3.8 million tax levies and almost 700,000 IRS tax liens during 2007, an increase from the previous year and a substantial increase from five years earlier.
Businesses
In the business arena, the IRS continued efforts to review more returns of flow-through entities – partnerships and S Corporations. While large corporate audits are down slightly, IRS has increased focus on mid-market corporations – those with assets between $10 million and $50 million dollars. The IRS enforcement budget in 2007 was similar to the budget in 2006, and in times of flat budgets, the agency cannot increase activity across the board but must address the areas where there is growth and potential risk.
IRS Tax Audit of S Corporations increased to 17,681 during 2007, up 26 percent from the prior year’s total of 13,984.
IRS Tax Audit of partnerships increased to 12,195 during 2007, up almost 25 percent from the prior year’s total of 9,777.
IRS Tax Audit of mid-market corporations increased to 4,473, up 6 percent from last year’s total of 4,218.
IRS Tax Audit of businesses in general rose to 59,516, an increase of almost 14 percent from the prior year’s total of 52,223.
Although the IRS Tax Audit of large corporations dipped slightly in 2007 to 9,644 IRS Tax Audit, the number of IRS Tax Audit is up 14 percent from the fiscal year 2002 level.
The key to proper IRS tax audit defense is to establish tax audit strategy at the beginning of the audit. If you are being audited by the IRS or California FTB and need an experienced tax attorney contact a Tax Attorney at Tax Lawyers Group.