So - what county has the highest IRS audit (examination) rate?
No, It it's not in the Acela Corridor - Nor is it Louden County VA (Louden has the highest median income in the US).
It's Humphrey County Mississippi (The "Farm Raised Catfish Capital of America") - Population 10,000; median income $26,000. Humphrey County's audit rate is half again that of Louden.
Many residents of Humphrey County claim Earned Income Tax Credits. Those credits generate about a third of the audit activity in the county.... We wouldn't want people "taking advantage of the system" after-all.
FYI: IRS audits ~0.7% of all returns filed; They get adjustments that averages $176 on the 87% of returns that are assessed.
The Service's obsession with EITC, which they audit about twice as often as they audit other issues (~1.7%), nets an average of $76 on 90% of those returns (Yes, all the differences are statistically significant!).
The flip side - what was supposed to be a relatively simple subsidy to poor taxpayers has become a bureaucratic nightmare with compliance requirements that rival those for corporations who repatriate foreign cash balances - a trillion or two at a time. Almost no one who qualifies for EITC can perform the gyrations they need to in order to collect it! Literally all of them must retain tax preparers - who apparently can't handle the due diligence either.
Full Disclosure: None of our clients qualifies for or claims EITC. Or at least we don't think they do...