Scott Usher, MST, CPA
Senior Manager, Tax Services

That's a trick question because no one really knows exactly how U.S. taxpayers are selected for audit. The mechanisms that the Internal Revenue Service uses to select individuals and businesses for audits are closely guarded secrets.

We do, however, know that the IRS audited 1,384,563 individual income tax returns in fiscal 2007―more than in any tax year in the last decade, and a significant increase over the previous year. Audits of small businesses were up even more.

We also know that there are certain general audit targets each year because the IRS announces them. Based on these announced targets and the historical data published by the IRS, it is possible to identify items on a return that will likely increase the risk of an audit.

Click Full Article to learn about the factors that increase your risk of being audited.