Chances of Being Audited by IRS Declining

CHANCES OF BEING AUDITED BY IRS DECLINING

MUNCIE, Ind. -- Your chances of being audited by the Internal Revenue Service are down, says a Ball State University tax expert.

About 400 IRS auditors are involved in implementing reform laws, leaving the organization short of manpower for auditing millions of tax returns in 1999, said Cindy Van Alst, a certified public accountant and an accounting professor.

The program to reform the IRS should modernize the federal organization, which is long overdue, she said.

"Chances of being audited are less than 2 percent but some returns have a higher risk," Van Alst said. "Returns reporting income greater than $100,000, high deductions, high losses from businesses or investments, home office deductions and self-employment income increase the chance of being audited."

She said taxpayers are already very good at skirting the rules and that many play Russian roulette knowing that so few returns are audited annually.

While auditing may decrease, income tax refunds are up 15 percent over 1998. The average refund is about $1,729 so far. The main reason may be the new $400 credit for children under 17 and tuition credits.

Van Alst believes a current bill to increase the child credit being considered by the U.S. House of Representatives stands a good chance of passing because such measures are popular with the voters.

"Many taxpayers want help with the costs of educating their children whether they are in public and private schools, and regardless of the education level," she said. "How popular these credits remain depend on whether something else comes along to take its place. It is almost like tax benefit du jour."

(NOTE TO EDITORS: For more information, contact Van Alst at [email protected] or at (765) 285-5105. For more stories visit the Ball State University News Center at www.bsu.edu/news on the World Wide Web.) Marc Ransford 4/9/99