In this Personal Finance article, the Wall Street Journal discusses the IRS’ intent to target random audits which will “probably cover more ground than a regular audit.”
Many of these audits serve primarily to determine ranges of reasonableness for various types of industries. For example, how much does a typical remodeling contractor really spend on vehicle expenses? If you’ve got your truck, your wife’s new Lexus and a teen-age son’s SUV all being paid for by the company, you might get a real surprise when the IRS knocks on your door to audit the books.
Read this article and prepare yourself by producing clean books, having them reviewed in detail by your CPA or tax preparer and make yourself responsible for the integrity of your numbers.
As the WSJ says “many targeted taxpayers might want to hire an accountant or lawer to represent them, which can end up costing hundreds or thousands of dollars”. Not to mention weeks of sleepless nights.