Individual return audit rates
To start, individuals get more audits than business and specialty taxpayers. In 2017, the IRS reported a 1 in 184 (0.542 percent) chance of being audited for all taxpayers. For taxpayers filing individual returns, the likelihood of audit is 1 in 161 (0.623 percent).
Out of the 150 million taxpayers who filed in 2017, here are the IRS statistics on who experienced an audit:
| Form 1040 taxpayer types, in descending likelihood of audit | Returns audited |
| International taxpayers | 1 in 19 |
| Taxpayers with gross income before deductions of over $1 million | 1 in 23 |
| Sole proprietors with gross income before deductions between $100,000 and $200,000 | 1 in 48 |
| Sole proprietors with gross income before deductions between $200,000 and $1 million | 1 in 64 |
| Taxpayers with self-employment income under $25,000 who claim the EITC | 1 in 72 |
| OVERALL INDIVIDUAL AUDIT RATE | 1 in 161 |
| Farmers | 1 in 228 |
| Wage earners who make under $200,000 and don’t claim the EITC (65% of taxpayers fit this category) | 1 in 364 |
The IRS is focusing its audit resources on areas where it knows taxpayers are traditionally noncompliant: small businesses, international taxpayers, high-wealth taxpayers, and possible Earned Income Tax Credit fraud schemes. Traditional wage earners who have traceable income reported on Forms W-2 face much less scrutiny.
Business and specialty tax return audit rates
Out of the millions of returns filed by businesses, employers, and specialty taxpayers (estate, gift, trust returns), here are the IRS statistics on who experienced an IRS audit:
| Business/specialty taxpayer types, in descending likelihood of audit | Returns audited |
| Large corporations (Form 1120, assets greater than $5 billion) | 1 in 3 |
| Estate tax returns | 1 in 12 |
| Large corporations (Form 1120, assets between $10 million and $5 billion) | 1 in 23 |
| Excise tax returns | 1 in 72 |
| Gift tax returns | 1 in 130 |
| Small corporations (Forms 1120, not 1120-S) | 1 in 146 |
| OVERALL CORP/PARTNERSHIP AUDIT RATE | 1 in 224 |
| Partnership returns (Form 1065) | 1 in 260 |
| Estate and trust income tax returns (Forms 1041) | 1 in 971 |
| Employment tax returns (Forms 940 and 941) | 1 in 568 |
| S corporation returns (Forms 1120-S) | 1 in 358 |
Click here for full article from Accounting Today
