According to TurboTax, these are your chances of being audited if you are:
A Partnership — .4%
An S Corporation — .4%
A C Corporation — 1%
An individual filing a Schedule C — 1.17%
An individual filing a Schedule F — .6%
Your chances go up if:
- Your type of business has a large amount of cash sales (eg restaurants, small stores, gas stations and motels)
- Your industry has a poor history of compliance (eg. air charter companies, bed and breakfast inns, gas retailers, mortuaries, cab companies, music industry businesses)
- A business associate was audited (eg. You received large amounts of cash from them.)
- Facts and figures don’t match (eg. Wages per payroll tax reports to wages per income tax return.)
- You claim bad debt expense but are a cash-basis filer.
Mortuaries? I don’t get that one!