IRS Steps Up Audits of Trust Tax Returns

1:37 pm Uncategorized

IRS Logo1 150x150 IRS Steps Up Audits of Trust Tax ReturnsAccording to a recent study conducted by the Trust Regulatory News, IRS audits of trust tax returns have increased more than 40 percent since 2007.

The study found that in 2007, only one in every 800 Form 1041 returns – which trusts and estates have to file on their income – was subjected to an audit.  In 2009, the number of audits jumped 15 percent – even though 1041 filings dropped 20 percent.  It is estimated that the IRS gained an extra $1.65 billion for the U.S. Treasury in 2009, courtesy of estate tax return audits.

The study also reported that field audits also soared – and that 85 percent of estate returns that get an on-site visit cost a large estate an average of $800,000 and an average trust $221,000 in unpaid taxes.

Although audit triggers continue to be kept under wraps by the IRS, the study found that the larger the estate, the more likely it was to receive notice of an audit – certainly no surprise for a cash-strapped government.

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