Does e-filing increase your chance of an audit?

来源: 古石 2013-03-24 00:36:12 [] [博客] [旧帖] [给我悄悄话] 本文已被阅读: 次 (6865 bytes)

 

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Does e-filing increase your chance of an audit?

Monday, March 12th, 2012

Indies — we know that we’re different and that the IRS looks at us with some suspicion – here I give a special thank you to the bamboozlers who keep writing books on how to set up a phony home business as a tax shelter.

It’s no surprise, therefore, that as the IRS steps up its goal to make paper filing a historical exhibit, many self-employed people wonder whether in the era of e-filing we are more likely to be audited. Nobody, or at least nobody not in the IRS, knows. Some tax professionals believe that e-filing will make audits more likely. Others believe the opposite, basing that speculation on the notion that e-filing reduces the number of reporting errors in tax returns.

When I spoke with Anthony Burke, an IRS spokesman, he agreed that an error-free return reduces the chance of an audit.  “The error rate for electronic filing is extremely minimal,” said Burke.  And that appears to be the official IRS position. Burke pointed out that in most cases a tax return with an error in it can’t be electronically delivered. “There are many more mistakes in paper filing and that means you are more likely to hear from us,” he suggested – although he added many problem tax returns are settled by means of a “correspondence audit.,” That’s simply a letter from the IRS asking you for more additional information. Oh, I know, a letter from the IRS appearing in your mailbox and you need quick resuscitation.

Other tax pros believe just the opposite: That it’s better to file a paper return because the percentages are in your favor. “E-filing would increase your exposure to an audit because it’s analyzed instantly for a discrepancy, whereas for manually-written returns, less than half are put into this algorithm the IRS has for red flags,” writes Jonathan Park on mymoneyblog.com. “You think every handwritten form is looked at? To cut corners, the IRS can’t look at them all. But it costs nothing to look at something that’s already in the computer.” Park admits that he has no evidence but that the conjecture makes sense to him. Me, too.

My guess is that e-filing will increase audits, for a related but somewhat different reason.  Here’s why. According to a Wall Street Journal piece  the Congressional Joint Tax Committee stated, in a 2009 report, that the cost savings associated with e-filing would make the IRS “better able to make use of its computer infrastructure to target returns with audit potential.”  In other words, fewer clerks culling and mulling over paper forms gives the IRS more money to hire additional auditors.

Since the inevitable turnover to an all e-filing system will soon make the argument moot, deal with it, indies. Freelancers shouldn’t be afraid of an audit, as long as you keep accurate  records, — learn how here –  report every dollar you earn, and take every deduction to which you’re entitled.

Finally, a suggestion, only partly related to audits: File as close to the deadline as possible – which means with an automatic extension, mid-October. Filing then has many advantages, as I have pointed out here. One other possible advantage: By mid-October the IRS may have already rounded up its quota of audits and won’t sift through the blizzard of last-minute filings. And, maybe the IRS knows, as do we indies, late filers are smarter.

 

所有跟帖: 

Xie-xie -inet-fan- 给 inet-fan 发送悄悄话 inet-fan 的博客首页 (0 bytes) () 03/24/2013 postreply 00:50:40

again, for simple return, go e-filing. otherwise -美西游子- 给 美西游子 发送悄悄话 美西游子 的博客首页 (47 bytes) () 03/24/2013 postreply 08:18:39

请教美西,有附加的statement,是否就不能e-filing了? -易木- 给 易木 发送悄悄话 易木 的博客首页 (0 bytes) () 03/24/2013 postreply 09:14:47

嗯!有道理。 -万枫- 给 万枫 发送悄悄话 万枫 的博客首页 (0 bytes) () 03/24/2013 postreply 08:37:13

thanks for the information -little-landlord- 给 little-landlord 发送悄悄话 (0 bytes) () 03/24/2013 postreply 12:48:10

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