Taxpayers in Georgia and around the country are less likely to receive an audit notice in 2017 than they were in previous years due to belt-tightening at the Internal Revenue Service. Lawmakers rely on the money collected by the IRS to fund federal agencies and pay for entitlement programs. However, congress has slashed the agency’s funds in recent years. This has led to budget cuts and layoffs in virtually all IRS departments, and fewer auditors mean fewer audits.
The IRS now audits less than 1 percent of the income tax returns it receives each year. Many experts expect that figure to fall even further in the years ahead. However, taxpayers may still be wise to submit their returns on time. This is because the IRS must pay daily interest, which is currently set at 4 percent, on any refunds that remain unpaid 45 days after the earlier of either the due date or the date that it was accepted by the agency.
There are other facts that few taxpayers know about the IRS. For example, taxpayers over 70 years of age are who fail to withdraw funds from tax-deferred retirement accounts each year face paying a 50 percent penalty. Withdrawals of this type can lead to higher taxes and higher tax brackets, but these problems can be avoided by donating the withdrawn money to charity. The IRS also allows younger taxpayers to withdraw funds from their retirement accounts without penalty in certain situations.
While the chances of an IRS audit may be low, there are still financial red flags that could lead to greater scrutiny. Experienced tax attorneys may be familiar with the kind of irregularities that raise questions at the IRS, and they could help taxpayers who are concerned about possible asset seizures and wage levies.