If You Get Audited Once, Will You Get Audited Again?

If you get audited once, you can get audited again but rarely for the same year. In very limited instances, an audit can be reopened or the IRS can provide notice that additional inspection is needed. Absent those circumstances, the IRS can’t audit you again for that year. However, you can be audited for prior or subsequent years. In fact, it is common to get audited multiple times. Technically, there is no limit on the number of times you can be audited but the IRS is prohibited from subjecting a taxpayer to unnecessary examinations. That’s why it’s important to consult a tax attorney to handle your existing tax problem and advise you how to minimize the risk of future audits by correcting mistakes or addressing other issues with your tax returns.

When Is the IRS Likely to Audit You Again?

The IRS doesn’t automatically assume that because you were audited in the past, you should be subject to another audit. Tax returns are scored to determine whether they should be audited. However, certain circumstances increase your odds of an audit, so if you fall into that category multiple years, it’s also more likely that you will face an audit. Also, if you were audited and it resulted in a significant adjustment to your return and taxes were owed, other years may also be reviewed. Note that an audit that started as focused on one year can be expanded to include multiple years.

Here are some common scenarios that may result in a repeat audit:

• Making the same mistake. If you made the same error in your tax return in multiple years, you will likely be audited each of those years. Common mistakes may include taking a deduction or credit that you were not entitled to take.
• You have a business. Self-employed income and loss reported on Schedule C for sole proprietors is commonly audited because statistics show chronic under-reporting of income and over-reporting of deductions among business owners. Cash-intensive businesses, especially in certain industries that have historically under reported income also are more likely to be audited. In addition, companies that take advantage of certain tax breaks may face repeated audits.
• Large losses. If you report large losses in multiple years, you are likely to face repeated audits and questions regarding whether you have a legitimate business.
• Income and/or deductions outside the norm. The IRS conducts a statistical analysis of returns and returns may be flagged if the amounts fall above or below the expected range.
• Discrepancies in data from multiple sources. The IRS gets data from various sources to find discrepancies between what a taxpayer has reported and a third-party such as an employer, bank or credit card company provides. These are likely to lead to an audit.

How Can a Tax Attorney Help?

These are just a few of the reasons that taxpayers may face multiple audits. Consulting a tax lawyer can help because he or she will understand what problems the IRS has with the return and whether they are likely to be repeated. Avoiding those concerns is the key to minimizing the odds of another audit or expediting resolution of an audit.

If you have received notice of an audit from the IRS or have a tax issue, contact us for assistance. We have been helping clients resolve their tax problems for over 25 years.