The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: Roy Lewis tips to avoid an audit Date:  4/12/2001  6:49 PM
Author:  gilvarymichael Number:  50168 of 128277

A few of his tips are accurate and a few are TOTALLY off.

In particular, using Electronic filing decreases your chances for "attracting unwanted attention" for the same reasons that Roy suggested using a computer, only it does these things even better than using your (or your accountant's) computer, because it uses the IRS's computer. This eliminates the chance that a typo in the Service Center will make your otherwise unsuspect return get kicked out for audit.

Likewise, the failure to use the IRS address sticker just increases the chance of processing errors which raises the chances for an audit and it also raises the cost of government (something every taxpayer should want to avoid).

The late filing is the biggest mistake of all. The IRS cannot start auditting Tax Year 2000 returns for several months at least because of the old computer processing system that it uses. So if you file on February 1 or April 16 this year, the time that the IRS has to audit your return is the same. Furthermore, if you get an extension so that you can file in August or October, then you just added (not subtracted) months to the audit window.

The residency idea is really a wild guess. Audit rates are mostly based upon staffing issues. A state with a high rate of audits last fiscal year might have a low rate in fiscal years 2003 and 2004 when the tax year 2000 returns are auditted.

Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us