Does filing for extension reduce the odds of an audit by the IRS ?
Q.Does filing for extension reduce the odds of an audit by the IRS ? This question is in reference to advice given by an accountant. I was wondering if anyone had any statistics on this.
A.Some say yes, some say no. I don't think anyone really knows. As for statistics, I don't know where you would find them.I think people just like to speculate on the subject! There are many who say this is true. Don't have any statistics, but I have one client who always filed on extension. The one year he got it all together by 4/15 he was audited. He has filed extensions ever since What follows is my opinion and I have no proof with which to support it. If IRS Auditors and their managers are subject to performance evaluations, then their assessments of additional taxes, interest, and penalties would be an appropriate metric of productivity. If that is the case, why audit 1040EZ's or returns with standard deductions? The logical thing is to audit complex returns. Now if you get an extension and you file four to six months later, you will probably find that your return was not in the pool for audit selection by computerized scoring. But you may be making your return a candidate for a target audit where your probability of being audited may be between 80 and 100 percent. If I was an IRS Auditor and I wanted to be Joe-SuperStar in the additional assessment business, I would audit only complex returns that were filed after April 15th. My opinion for what it's worth is that filing for extension decreases your chances of random audit selection. It has no effect on the chances of selection for audit via DIFF scoring. IRS auditors have no control over who is selected for audit generally unless they become aware of some impropriety. Otherwise, they merely audit those returns selected for them. This is only my opinion and likewise has no factual or empirical basis other than my gut feel.
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