Will you be audited? Will your offer in compromise be accepted? The IRS has published its 2010 data book which provides clues

The data book gives valuable insight into how many tax returns the IRS audits and what categories of returns the IRS focuses on.  Will you be audited?  1,581,394 out of  142,823,105 (about 1.1%) income tax returns were audited. This is an increase from about 1% rate for 2009. About 30% of the audits contained an earned income tax credit (EITC) claim, a decrease from about 36% from 2009.

Of the audits, 78% were correspondence audits (no revenue agent or compliance officer involved) up from 77%.

Of the returns not claiming the EITC the following rates are listed in 2010 compared with 2009:

a) business returns other than farm returns with total gross receipts of $100,000 to $200,000, 4.7% up from 4.2%
b) business returns other than farm returns showing total gross receipts of $200,000 or more, 3.3%up from 3.2%.
c) farm (Schedule F) income, 0.4% up from 0.3%.
d) returns showing total positive income of $200,000 to $1 million, 2.5% of returns with no business activity, and 2.9% of returns with business activity were audited compared with 2.3% and 3.1% respectively.
e) returns with total positive income of $1 million or more was 8.4% up from 6.4%.

Offers-in-compromise: In 2010, 57,000 offers-in-compromise were received by the IRS (up from 52,000 in 2009), and 14,000 were accepted (up from 11,000).

Penalties: In 2009, IRS assessed 27 million civil penalties against individual taxpayers, up from 26 million civil penalties assessed in2008. Of the 2010 assessments,the amount of penalties by percentages were 57% for fail to pay, 27% for estimated tax underpayment, and 13% for delinquency.