It seems that the top 10 states with federal tax audits are the following ones:

• Vermont
• California
• Nevada
• Massachusetts
• Delaware
• Colorado
• New York
• New Jersey
• Florida New Hampshire

Also, the following states have the highest likelihood of state tax audit:

• Hawaii
• New York
• Delaware
• Michigan
• Massachusetts

And now..the question that we’ve all been wondering about…

How come more taxpayers are audited in these states?

First things first, just because there’s a higher percentage of tax returns audited by the IRS in Vermont and California, this doesn’t mean that those returns are specifically selected because those taxpayers live there.

Income is one of the biggest factors because it’s well known that taxpayers with higher incomes are audited more often, and for obvious reasons. The IRS will audit a taxpayer with a $1,000,000 and one with a $50,000 income. Which one do you think will produce more revenue for the IRS? And to answer this question, we can easily remember the robber anecdote:

When you ask a robber why he robbed banks, he will answer: “Because that’s where you will find the big money.” So, in comparison, when you ask IRS how come they only audit rich people, the answer will be the same.