| The mere thought of being audited by the IRS is | | | | were individuals or companies, most would've been |
| enough to give most people the willies. There is a | | | | forced into bankruptcy long ago. They have racked up |
| reason for that, but many people completely ignore | | | | years of debt and now have major cash shortfalls. |
| state tax audits. This is a mistake given the fact such | | | | There are three steps they can take at this point. One |
| audits are going to rise dramatically. | | | | is to cut expenditures. The second is to raise taxes. |
| The United States is generally considered a good | | | | The third is to increase audits of individuals and |
| financial bet. This was proven once again during the | | | | businesses to try to find lost revenues. The first two |
| worst part of the recession when people, institutions | | | | will happen at the last moment because politicians don't |
| and countries around the world invested in treasury | | | | want to be associated with either act, but audits are |
| notes. This practical faith allows the federal | | | | already amping up. |
| government to spend far more than it takes in without | | | | How is a state tax audit different than one carried out |
| much in the way of short term consequences. The | | | | by the IRS? Well, every state handles them a bit |
| same is not true for states. | | | | differently from a procedural perspective, but all will |
| The states are having a brutal time in this economy. | | | | ask you for records proving your claimed deductions |
| While everyone likes to point to California and its 24 | | | | and such. One significant difference, however, will be |
| billion dollar deficit, a better example is Arizona. The | | | | the law applied. Most of us barely know federal tax |
| state just reported its tax revenue for July 2009 was | | | | law if we are honest. Few of us even know how to |
| over 10 percent less than the revenue collected in July | | | | look up state tax law, much less what it says. If you |
| 2008. Perhaps even worse, the figures for July 2009 | | | | are faced with a state tax audit, getting a CPA or tax |
| represented the 18th straight month of reduced tax | | | | attorney involved is a must to avoid being run over. |
| revenues. This is a common scenario faced by most | | | | States are in desperate need of money. That means |
| states. | | | | more audits. Make sure your tax records are in good |
| The current financial status of states is brutal. If they | | | | shape before that happens. |