What flags might trigger an audit? Failing to report taxable income
is at the top of the list. A close second is “breaking the rules on
foreign bank accounts.” Hunting undisclosed offshore accounts remains an
IRS priority, a fact supported by its staffing trends. For example, in
2001, the IRS had 13 Special Agents in its international
operations unit, and none in what it calls the “global high wealth”
unit. But by 2011, there were 71 revenue agents assigned to
global high wealth and 856 to international operations.
With respect to unreportable income, the IRS has taken great pains to
know what the median average wage is for the job you have. If your
income is out-of-proportion to how much other people in the same
industry earn, the IRS will want to know why.
One question that you might be asking yourself is whether an audit
could turn criminal. That possibility always exists. After the civil
agent has worked on your case, it can take one of two directions. First,
the agent may not perceive your case as having criminal potential. In
that case, he will close the audit making such civil recommendations as
he thinks appropriate.
To the extent that the agent proposes a change, you have two choices.
First, you can agree, thereby paying more taxes, interest, and/or
penalties. Or second, you can disagree. If you disagree, you can appeal
or enter into mediation with the IRS.
Second, the agent may determine that your case has sufficient
criminal potential that it should be referred to Criminal Investigation.
This can happen anytime during the audit process, but it often happens
toward the end after the agent consults with an IRS fraud coordinator.
http://www.deblislaw.com/will-the-irs-audit-me-if-i-quietly-disclose-my-previously-unreported-offshore-account-on-an-amended-return-and-a-delinquent-fbar.html
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