"Other IRS Initiatives
Here's a quick summary of other major projects the IRS has on the front burner.
Find unreported income. The IRS has developed a new computer program to identify returns most likely to have underreported income. (How will it do so? Nobody knows. It's proprietary government information.) In the past, IRS computers focused more on fingering returns most likely to have overstated deductions.
Failing to report income can get you into a whole lot more trouble than puffing up your deductions a bit. Why? Because it's a very tough sell to claim you didn't realize that you have to report all your income to the IRS. In contrast, the rules for deductions are often so murky that even the most honest taxpayers can make mistakes."
During the 2004 fiscal year, which ends in September for the government,
the IRS audited approximately 195,200 high-income individuals (sic- high income defined as $100,000 or more in gross earnings). The audits hit 1.5% of all high income individuals and represented an increase of 40% over FY 2003.



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