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Audit Rates for Partnerships

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  • Audit Rates for Partnerships

    Can some of the accounting people on this forum tell me what the IRS audit rates are for partnerships? Say income range 200-300k.

    Are partnerships more or less likely to be audited than sole proprietors?

    Also, what are the usual percentages for  business deductions for the category of "medical consulting" ?

  • #2
    Good news - the chances of being audited by the IRS are at an all-time low, for all categories.

    • For business (non-corporate) returns with gross receipts > $200k, your chance of being audited in 2016 was 1.9%, down from 2% in 2015.

    • For business (non-corporate) returns with net income of $1M+, the rate was 5.8%, down from 9.6% in 2015.

    • As you might expect, higher-income individuals have more opportunity of being audited than lower.

    • However, the highest indicator of audit probability is taking the EIC (Earned Income Credit). In 2016, 36.7% of those selected for audits had taken EIC.


    You can find these and more stats in the IRS Data Book, published annually.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Our private practice has been audited twice in the last 20 years, once by the IRS and once by the State. In neither case did it amount to much more than the cost of our account's time to provide documentation and explanations. I think the State made us pay a few hundred dollars for not depreciating this or that properly, but I got the sense that they had to find SOMETHING to justify their existence, rather than a violation of the law.

      Of course, we were not deducting our bathroom use.

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      • #4
        We had two correspondence audits on personal taxes over the years.  None on the LLCs --directly.

         

        Then last year our SON got the dreaded NPR -- National Research Program Audit.  Since he is member of LLC, they reviewed the entire LLC structure too.  What a PITA that was with 6 hours of my life not getting back.

         

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        • #5




          We had two correspondence audits on personal taxes over the years.  None on the LLCs –directly.

          Then last year our SON got the dreaded NPR — National Research Program Audit.  Since he is member of LLC, they reviewed the entire LLC structure too.  What a PITA that was with 6 hours of my life not getting back.
          Click to expand...


          That's the problem with groups - if one member gets audited, the group gets audited and vice versa.
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6
            I have been audited once by my state's unemployment tax dept.  I think I had to pay an additional $50.  The accounting fees were the bigger expense.

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