It’s estimated that only about 1 percent of taxpayers are audited by the Internal Revenue Service (IRS). If you’re playing by percentages and filing your taxes on time and correctly, chances are you’ll never hear a peep out of them. But for the taxpayers that do, seeing the words “you’re being audited” on a letter from the IRS can be frustrating, annoying and potentially very costly.

Specifically, being audited means that the IRS is checking up on you and your finances to ensure that your taxes were filed correctly. Although it’s not unheard of for the IRS to randomly select taxpayers and businesses to audit, the decision to audit is normally triggered by some sort of statistical outlier on your tax return compared to a pool of similar tax returns that yours is grouped in. The IRS is also more likely to audit the more high-income taxpayers. For instance in 2008, some 5.6 percent of those audited made more than $1 million, whereas fewer than 1 percent of taxpayers making less than $200,000 were audited.

We already told you about why the IRS may order an audit based on the statistical discrepancy reasoning, but here’s a look at more of the specific situations in which the IRS could check up on you and your tax returns:

• Improper Tax Deductions: When filing your taxes, it’s important to be truthful. And a common area where people either make a mistake or fudge the numbers a tad is in tax deductions. There are even certain deductions that send “red flags” to the IRS, such as deducting business expenses that were not reimbursed.
• W-2/1099 Discrepancies: Businesses are required to submit W-2 forms and 1099 forms to the IRS for each person they employ. And these forms are always cross-referenced by the IRS with the taxpayer them self. So if the numbers don’t add up between the two forms that were submitted on behalf of the business and by the employee, the computers the IRS uses will catch it. The result could be an audit, either to the business itself or the employee taxpayer.
• Schedule C: Solo proprietors are required to fill out Schedule C forms, which detail profits or loss from a business. Solo proprietors pay significantly less in taxes than those that are incorporated, so the IRS more carefully examines these forms to make sure you’re paying the correct amount of taxes. Even if you file correctly, the IRS may still want verification.
• Early Filing: Believe it or not, timeliness may not be in your favor when filing. It’s projected that those who file their taxes closer to the deadline are less likely to be audited compared to those who file early.
• Entertaining: If you own a business, chances are at one time or another you’re going to be out there entertaining customers. Businesses can claim up to 50 percent of dining and entertainment expenses on their tax returns. However, the IRS doesn’t like to see expensive parties written off and may ask for clarification between what’s an entertainment expense or just a regular business expense.

Bottom line: To avoid being audited, always be truthful on your tax return. You might even consider hiring an expert to help you understand what can and cannot be deducted when filing. If you have IRS tax issues, learn how to stop wage garnishment problems from a reputable tax attorney.

As everyone knows, tax laws are one of the certainties of life. Most of us are aware of income tax and sales tax, but did anyone know that most countries around the world taxes prostitution. We had a closer look at some of what we call the weirdest tax laws around the world.

Weird Tax Laws From Different Parts of The World

Just look at Tennessee’s tax law on the possession of illegal drugs. Apparently, you have up to 48 hours to report the fact that you are in possession of illegal drugs to the Department of Revenue. Wouldn’t you assume that such a tax would not be paid for fear of getting arrested on reporting being in possession of illegal drugs?

Why Weird Tax Laws Gets Enforced

Often times some weird tax laws get passed to help some states to close their budget gaps. Just take a look at some weird tax laws that were passed in the US back in 2010:

• Making candy without flour was taxed by the state of Washington. “Lemon Drops” and “Rainbow Whirly Pops” were taxed due to this law being passed while “Peppermint Bark Shortbread” was exempt of any tax.
• In Texas, belt buckles were taxed while belts on its own were exempt.
• Then there was another strange tax law on bagels that were eaten at the bagel shops in New York. If you eat the bagel as the shop, then you must pay tax on it. But, when you took it home with you, it was exempt from any sales tax.
• If you are ready for some laughter, then you need to hear this. Taxes were proposed on cow flatulence in some European countries, including Denmark and Ireland. The Irish managed to quickly squash the laws that they wanted to pass on penalizing cow owners at $18 per animal for emitting methane through burping and flatulence. In Denmark, the tax officials wanted to charge as much as $110 per cow due to the Food and Agriculture Organization claiming that as much as 18% of the green house gases are being emitted from livestock.
• In Ohio if you happen to ignore an orator on Decoration Day by playing croquet of by pitching horseshoes within a mile of where the speaker stands, you can expect to be fined as much as $25. It is also regarded as illegal to get a fish drunk.
• Apparently back in 2009, people in China (Hubei province) were forced to buy more cigarettes than what was normally the case. Government official were pushed to smoke close to a quarter of a million packs of cigarettes in an effort to stimulate the economy during the financial crisis.

Isn’t it just strange and weird what tax laws are brought out in an effort to boost the particular country or state’s revenue?