Can You Get Audited Every Year?

The Internal Revenue Service (IRS) is responsible for enforcing the nation’s tax laws. As part of this responsibility, the IRS conducts audits to ensure that taxpayers are complying with these laws. While most people associate audits with negative consequences, they can also be an opportunity for taxpayers to correct any errors on their tax returns and avoid future penalties.

How Often Can the IRS Audit You?

There is no limit to the number of times the IRS can audit you. However, the IRS is generally prohibited from auditing the same tax year more than once. This means that if you were audited for the 2020 tax year, the IRS cannot audit you again for the same year unless there is evidence of fraud or tax evasion.

Why Would the IRS Audit You Multiple Times?

There are several reasons why the IRS might audit you multiple times. Some of these reasons include:

• You made the same mistake on multiple tax returns. If you made the same error on your tax return in multiple years, you are more likely to be audited each of those years. Common mistakes 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 underreported income, are also more likely to be audited. In addition, companies that take advantage of certain tax breaks may face repeated audits.
• You report 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.
• Your income and/or deductions are 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.
• There are 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.

What Can You Do If You Are Audited Multiple Times?

If you are audited multiple times, you should contact a tax attorney. A tax attorney can help you understand why the IRS is auditing you and can help you develop a strategy to minimize the risk of future audits.

How Can You Avoid Being Audited?

There is no surefire way to avoid being audited, but there are some things you can do to reduce your risk. These include:

• File your tax returns on time and accurately. The IRS is more likely to audit returns that are filed late or that contain errors.
• Keep good records. The IRS may ask you to provide documentation to support the information on your tax return. If you have good records, you will be able to provide the IRS with the information they need quickly and easily.
• Be aware of the IRS’s audit criteria. The IRS uses a variety of criteria to select returns for audit. By being aware of these criteria, you can take steps to avoid triggering an audit.

The IRS can audit you multiple times, even for consecutive years. However, the IRS is generally prohibited from auditing the same tax year more than once. If you are audited multiple times, you should contact a tax attorney. A tax attorney can help you understand why the IRS is auditing you and can help you develop a strategy to minimize the risk of future audits.