We follow a few reputable IRS prognosticators and in-the-loop people. Here's the latest in scrutiny and audit alerts:

Appraisers: in a memo to field agents, the IRS mentioned the penalties for misstatements in appraisals that result in taxes saved. These penalties apply to the payer of the tax and may apply to the appraiser. Agents will be paying attention to both sides in any reviews or audits.

R&D Tax Credit: The IRS has found many R&D tax credit claims without proper documentation or based on bogus assumptions. Examiners have been told to slap a 20% fine on spurious claims.

S Corporations: Recent audits have found areas of noncompliance, so agents will be on the lookout for: excessive travel, meals, and entertainment expenses; expensing of tools and supplies; taking profits as dividends instead of salary to avoid payroll taxes. S Corporations can be a solid tax structure, but owners should be aware of increased scrutiny and follow the guidelines.

Payroll Tax Audits: notices of 6,000 exams over three years were going out in November, but were delayed until February of 2010.  The IRS wanted to fine-tune the selection criteria to select fewer profiles that would result in a no-change audit. Payroll audits look for employee classification issues, executive pay levels, and treatment of fringe benefits. Examiners will be closely looking at S Corps, ensuring owners aren't paid little/no salary. (The illegal strategy is to pay out profits as dividends, avoiding payroll taxes.)

As always, there's reason to fear the IRS if you've followed their regulations and kept good records. While audits can be nerve-wracking and tiresome, there are a few simple steps to prepare. If you've avoided taxes, then fearing the IRS is probably warranted.