WHILE there are no guarantees to avoid an audit, there are good ways to attract one. Below are 10 easy ways to increase your audit profile. Try any combination of the following to help the IRS zero in on your return:
1. Opt out of e-file to use a name different from the one that appears on your social security card.
2. Claim a number of dependents - your mom, grandpa, aunt, cousins - and huge child care expenses.
3. Create a mismatch with IRS data base files by estimating interest income, independent contractor income, LLC income, and mortgage interests instead of using exact numbers from forms 1098, 1099, or K1.
4. Do not report savings accounts that you want to hide from the IRS (or from your spouse)
5. Claim high and unsupported charitable contributions. Claim casualty losses to increase your refund. While you are on a roll, claim high medical insurance and zero insurance reimbursement.
6. Use big round numbers such as $500 or $2,000. Better yet, dump them into “miscellaneous” deductions.
7. Submit Schedule C Income from Business or Profession with an attractive net loss. Report low gross receipts and deduct few but unusually high expenses. Make the schedule even more attractive by claiming deductions for home office and 100% depreciation on a car, home computer, or cell phone.
8. Consistently file late returns. Don’t break tradition.
9. Submit sloppy returns. A sloppy return speaks of a sloppy person with sloppy supporting tax documents. You’d be a good catch for an auditor.
10. Stand up for your constitutional rights. Fight for immunity from income taxes. Join a tax protest group. Join a Barter Club. The IRS loves a cash society. They love you so much that they will even send you an invitation for an audit.
Development: IRS auditors can now access a Custom Comprehensive Report about you. It contains:
1. Birth date, professional license, driver’s license, DMV registration, accidents.
2. Properties owned & addresses, type of neighborhood you live in.
3. Bankruptcies, liens, judgments, UCC filings.
4. No of people at work, possible associates, transactions with relatives.
5. Criminal records, concealed weapons permit.
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Victor Santos Sy, CPA, MBA, provides professional services in accounting and tax controversy including IRS audit defense and offers in compromise. He also advises clients on choices of entity including corporations for small businesses and LLCs for rentals. Vic worked with SyCip, Gorres, Velayo (SGV - Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation at 704 Mira Monte Place, Pasadena, CA 91101. The firm celebrates its 34th anniversary in 2011. You may email tax questions to Vic at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . You are welcome to visit our website for about 300 tax tips at www.victorsycpa.com.
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