Audits on the Rise

According to the latest IRS Data Book covering the government’s fiscal year ending September 30, 2010, the overall audit rate on individuals increased slightly to 1.1%; it had been 1% in the 2009 fiscal year. However, for wealthy individuals-those with income of $1 million or more, the audit rate rose to 8.4%, from 6.4% in fiscal year 2009.

The audit rate for sole proprietors also rose slightly. The following is based on gross receipts reported on Schedule C:

• Under $25,000: 1.2% (up from 1.1%)
• $25,000 to under $100,000: 2.5% (up from 1.9%)
• $100,000 to under $200,000: 4.7% (up from 4.2%)
• $200,000 or more: 3.3% (up from 3.2%)

Source: 2009 and 2010 IRS Data Books