IRS enforcement numbers, released December 22, 2009, show that returns under that amount have a 1 percent chance of getting audited.
Returns showing income of $200,000 and above have a nearly 3 percent audit chance. The percentage jumps to more than 6 percent for returns showing earnings of $1 million or more.
The percentages apply to both individual and joint returns.
The number of audits jumped 11 percent from 2008 to 2009 for returns with earnings of $200,000 or more, but rose 30 percent for returns showing earnings of $1 million or more. For those under $200,000 the number of audits remained steady.
The IRS conducted 1.4 million audits of individual returns in the financial year ended Sept. 30, with more than 1 million conducted through correspondence with the taxpayer. The others were conducted through face-to-face meetings with IRS auditors.The IRS does not do random audits, but does conduct "research audits" that will test compliance in business tax categories.
In 2010, the target will be payroll taxes.
The IRS will emphasize audits of businesses and scrutinize the classification of independent contractors. All businesses should prepare now to assure they can support claiming independent contractors.