“That is a very significant noncompliance rate,” the IRS Commissioner told reporters. “We do not have specific conclusions as to how much of this is willful or confusion.”

Sole proprietors are at least 10 times more likely to be audited this year than other business entities. Last year, with more enforcement personnel available, the IRS audited almost twice as many individuals as five years previously.

Professionals advise sole proprietors to consider making their businesses corporations or LLCs to avoid audits and to hire an Enrolled Agent (EA) or a Certified Public Accountant (CPA) for tax advice.

What are the red flags the IRS will be looking for in sole proprietor returns? Underpayment of quarterly estimated payments, or late payments, could be significant to the IRS. Sole proprietors should also watch their income-to-deduction ratio. If this ratio exceeds 52 percent, an individual is more likely to be audited. Finally, beware of the home office deduction – a prime IRS deduction, avoid vague expense categories, such as "miscellaneous."

Kevin McKeon, an IRS spokesman, was asked what red flags the agency looks for and “how it determines who would get audited.”

McKeon said that common errors that tip off the bureau are invalid or incorrect Social Security numbers for the filer or dependents, math errors, and incorrect bank deposit numbers or routing numbers. Returns will get special attention when the taxpayer fails to sign and date the return or fails to attach W-2s.

Generally the IRS assigns a numeric score “somewhat like a credit rating” to each return, and thereby determines which returns will require more review. But “the major reason of all audits is illegal tax shelter," McKeon said, “or the use of offshore credit cards.” “Sometimes we (the IRS) look at an industry and if you work in that industry you might be audited,” he added.

Returns prepared by computer are neat and less likely to have math errors experts agree. Taxpayers should prepare their returns early, but should not file early.

McKeon advised using only reputable tax preparers, those who have the title “enrolled agent” meaning that they’ve taken a qualifying test from the IRS.