Tax Audits & Penalties

Filed Under: Income Tax Basics, Tax Advice
For the 12 months ended September 30th, 2006, the IRS received nearly 133.9 million individual income tax returns with tax payments of over $1.236 trillion from individuals, according to the Internal Revenue Service Data Book 2006.

Of the 132.2 million individual returns filed in the 2005 calendar year, IRS revenue agents examined, or audited, 1,283,950 returns. That's about one percent of all individual income tax returns filed during the year.

As these figures show, the IRS audits only a fraction of tax returns. Instead, it relies on statistical sampling, matching of statements from employers and financial institutions with individuals' statements, and other sources of public information to help identify returns for audit.

While the odds of being selected for an audit are small, it helps to keep good records and all receipts in the event you are selected for an audit. Your documents provide an audit trail that explains how you completed your tax return.

For more information on the IRS's examination process, see IRS Pub. 556.

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Believe it or not, the Internal Revenue Service doesn't require a return from some people.
Who Has to File a Tax Return?

If the IRS investigates your tax case and decides against you, you may seek to appeal the case. The first round of an appeal is likely to involve the IRS Appeals Office, which relies on an informal conference procedure. For more information on the appeals process and your rights, see IRS Pubs. 5 and 1660

You may also wish to review the IRS's collection process, found in IRS Pub. 594. This publication describes how the IRS will impose a tax lien on your property to secure a claim.

If the IRS's appeals office rules against you, you may appeal its ruling to the appropriate judicial court: U.S. Tax Court, U.S. Court of Federal Claims or U.S. District Court. For more information on the jurisdictions that each of these courts cover, see Pub. 5.

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Khayenn57 04:44:32 PM May 23 2008

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i can go for the FLAT TAX for INDIVIDUALS ONLY but business should have to pay a percentage; in particularly large corporations... i.e. oil companies. Small businesses can be made to pay a flat percentage on taxes as well as the continued fica/medicare portions that they have to pay now.

ChicoCaliDan 11:48:19 AM May 12 2008

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After reading the comments I must say you people don't get it, do you? The feds have the tax system right where they want it. Sure, a flat tax would mean everybody pays, but that would also mean that EVERYBODY paid.

OOTME2 10:13:23 AM May 10 2008

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THIS COUNTRY NEEDS A FLAT TAX FOR EVERYONE...make it simple and make life more better off for all of us.

Dante74 11:21:50 AM Apr 07 2008

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Fellow taxpapers: PLease sign the FairTax pettion. The would end all federal
income tax as we know it. In its place would be a national sale tax based on
consumption. Go to FairTax.org. (Repeal the 16th Amendment)

DCCDSOUTH 02:00:57 PM Feb 27 2008

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**For the 12 months ended September 30th, 2006, the IRS received nearly 133.9 million individual income tax returns with tax payments of over $1.236 trillion from individuals, according to the Internal Revenue Service Data Book 2006.**

This might sound crazy, but what do you think would happen if 1/2 the U.S. tax payers went to their employers tomorrow, changed their w4's so that no taxes are witheld each week, and then come 2009, those same people decide not to file a tax return in protest against the IRS and the illegible and rediculous tax laws? I'm just curious...

Alittlepip1 10:28:31 AM Feb 08 2008

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flat tax, it would save millions for the tax payer!

Alittlepip1 01:56:37 PM Feb 04 2008

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SCREW IRS , THEY MAKE EVERYONE LIVE IN A WORLD OF FEAR, GO PRINT MORE IF YOU NEED IT OR BETTER YET GET IT FROM THE ILLEGALS!

Tigercubx3 06:01:46 PM Jan 20 2008

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Abolish the IRS now, and ut in a NATIONAL SALES TAX. Undergrown economy wll come to a halt. Why do we need TWO tax collection agencies . State dept of revenue and IRS.i

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