Is Your Profession a Factor in Whether or Not You Get Audited?

by | Apr 25, 2015 | Tax Evasion

If the Internal Revenue Service decides to audit you or your business, you may be wondering why they chose you. What information raised red flags? And how did they decide that you were worth investigating?

Unfortunately, the answers to these questions are usually case-specific. That being said, the government has actually conducted studies on the likelihood of committing tax fraud by profession. In today’s post, we’ll discuss some of those findings.

According to FindLaw.com, these were the professionals identified by the government as “top offenders” of tax fraud:

  • Clothing store owners
  • Restaurant owners
  • Salespeople
  • Car dealers
  • Doctors
  • Lawyers
  • Accountants
  • Hairdressers

The government has also found that there are two groups of taxpayers responsible for the majority of tax fraud. The first group consists of self-employed individuals who run cash-based businesses. The second group consists of service workers who make most of their income in cash. Examples include:

  • Restaurant servers and bartenders
  • Auto mechanics
  • Handymen

With both groups, underreporting cash income is easy and therefore tempting.

Although the IRS may consider a taxpayer’s profession when deciding to audit, one’s job or profession alone is not enough to trigger an audit. That being said, anyone who primarily gets paid in cash would be wise to keep very accurate records in case the IRS does get suspicious.

While we’re on the topic, you may be wondering how/if the IRS can tell the difference between intentional tax fraud and mistakes caused by carelessness. Check back next week as we continue our discussion.

 

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