Chances of a tax audit higher in rural Colorado
Chances of a tax audit higher in rural Colorado
Something to chew over now that tax returns have been filed. The Internal Revenue Service is conducting about 40 percentage less audits than it did back in 2010.
But where person lives can make a big difference in the odds of receiving a tap on the shoulder from the IRS. surprisingly, taxpayers in poorer areas are more likely to get a second look.
Saguache, Baca, Conejos and Crowley counties are where Colorado taxpayers face the highest risk of an audit from the IRS, according to an article from ProPublica based on research from Tax Notes.
In Saguache, 9.4 out of every 1,000 tax returns underwent an audit versus a 7.4 magnitude relation comprehensive and 7.7 magnitude relation nationwide. The county is among the poorest in the state, with a median family fiscal gain about $20,000 below the comprehensive median of $65,458, according to Wall Street 24/7.
For the most part, higher-fiscal gain counties have an audit rate closer to the state average or just below, piece poorer counties on the Eastern Plains and the southern half of the state face a higher audit rate.
ProPublica’s study found that taxpayers in Humphreys County in Mississippi, which has a median family fiscal gain of $26,000, are audited at a 51 percentage higher rate than those in affluent Loudoun County, Virginia, where median fiscal gains run closer to $130,000.
But the pattern isn’t absolute. The three counties in the state with the last rate of audits are Mineral, Hinsdale and San Juan. Taxpayers there were audited at a rate of 2.4 or 2.2 per 1,000 returns.
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As to the why poorer areas face higher audit tax, it comes down to the earned fiscal gain tax credit (EITC), which is available to lower-fiscal gain taxpayers.
ProPublica found in some other study that the last strata of taxpayers who claim the EITC are audited at doubly the rate of filers in the $200,000 to $400,000 range. Only taxpayers with fiscal gains of $1 million or more are audited at a higher rate than EITC recipients.
The root cause isn’t fraud so much as the complexity of tax rules when it comes to the credit, which is tripping up taxpayers and causing them to claim the wrong amount, according to ProPublica.
