Published: November 15, 2008 09:23 pm         

More and more taxpayers hearing from IRS

Local Business column

Now is the time to start thinking about your end-of-the-year personal income tax return. One reason is the Internal Revenue Service continues to audit more and more returns each year.

In 2007, one in 97 tax returns was examined by the IRS, up from one in every 202 in 2000.

According to H&R Block, that number is likely to rise again this year as the IRS steps up its efforts to close the $290 billion tax gap by increasing audit activity.

In fact, starting in October, an additional 31,000 taxpayers nationally received CP 2057 “soft notice” letters from the IRS, according to H&R Block officials. Soft notices will likely be sent in situations where the IRS received an information document showing income that appears to be under reported on the tax return.

“The audit experience is complex, confusing and often frustrating for the typical taxpayer,” said Jenny Rose of H&R Block at 1101 Stafford Drive, Princeton. “H&R Block has some of the most well-trained audit-authorized tax professionals in the nation who are equipped to handle the most complex tax situations.”

Rose says as the number of audits continues to grow, more taxpayers need guidance.

Rose says impacted taxpayers range from individuals to home-based business owners to large businesses and everyone in between. No one is exempt.

“The IRS reported that audits of filers with income of $1 million or more increased by 84 percent while audits of those with income of $100,000 or more also increased by more than double digits,” she said.

Rose cautions taxpayers who want to “go it alone” in dealing with an audit.

“Once you receive a notice from the IRS, it’s imperative to contact your tax or financial professional,” she said. “The matter may be as simple as filing an amended return or sending supporting documentation. But in more serious situations, time is of the essence. Any delays could result in additional penalties and fees for the taxpayer.”

(Pace is a reporter for The Register-Herald.)

— E-mail: fpace@register-herald.com