The IRS is shifting its focus off households below $200K to taxpayers with income over 200K. The number of audits for households with income over $1 million went from 14,187 in 2006 to 36,422 in 2011. It’s the opposite for corporations. From 2008 to 2011, coverage audits for firms with assets between $50 million and $100 million went from 11.7% to 18.9%, firms with assets over $250 million went from 27.4% to 27.6%. Why the shift? An IRS analysis found that the center of the tax gap is unreported or underreported business income. If audited, work in cooperation with the IRS early on to establish the framework and ground rules for examination. Also, have the needed facts and legal analysis, and present them to the IRS during the exam can lessen the chances you will have to go to appeals or tax court.

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