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IRS Audit Selections

March 31, 2017

Of the 1,034,955 individual income tax returns audited in FY 2016, roughly 36.7% (380,260) were selected for examination on the basis of an earned income tax credit (EITC) claim. Only 23.6% of the individual audits were conducted by revenue agents, tax compliance officers, tax examiners and revenue officer examiners. The 76.4% balance of the audits were correspondence audits. The following are selected audit rates:

  • For business returns (for individuals not claiming the EITC and for other than farm returns) showing total gross receipts of $100,000 to $200,000, 2.2% of returns were audited in FY 2016, down from 2.5% in FY 2015.
  • For business returns (for individuals not claiming the EITC and for other than farm returns) showing total gross receipts of $200,000 or more, 1.9% of returns were audited in FY 2016, a decrease from 2% in FY 2015.
  • Of the returns showing farm (Schedule F) income, 0.4% were audited in FY 2016 versus 0.3% in FY 2015.
  • For nonbusiness returns showing total positive income of $200,000 to $1 million, 1% of returns were audited (down from 1.8% for the previous year); for business returns, 2.3% of such returns were audited (down from 2.9% for the previous year). In general, total positive income is the sum of all positive amounts shown for the various sources of income reported on the individual income tax return and, thus, excludes losses.
  • For FY 2016, the audit rate for returns with total positive income of $1 million or more was 5.8%, down from the 9.6% rate for FY 2015.

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