7 Habitual Mistakes Companies Make – Chapter 4 (10)

TaxConnections Blog Post
What Does It Mean When a Taxpayer Receives an IRS Query? –

GENERALLY, WHEN A taxpayer receives an Internal Revenue Service query, IRS intends auditing the taxpayer’s tax affairs. Such a query generally takes the form of a written notification to the taxpayer in terms of which the taxpayer is requested to provide the IRS with certain information and documentation relating to either a specific transaction or to specific tax years.

The query may include an investigation of all the relevant taxes applicable to the taxpayer, such as income tax, value-added tax, sales tax, PAYE, and payroll taxes.


Is the IRS Entitled to Request Information and Documentation from Taxpayers?

THE EMPOWERING LEGISLATION that gives the IRS the power to administer and collect taxes will provide that IRS with the authority to require a taxpayer or any person to furnish information, whether orally or in writing, documents or things, to that IRS.

It must be understood that this is a compelling provision which taxpayers are in general required to adhere to. But make sure that the IRS has applied the provisions of the empowering legislation correctly, failing which the taxpayer would have a good reason not to comply. Legal guidance should be sought on this before such a bold step is taken by the taxpayer.

Where information or documentation is not provided by a taxpayer, the IRS can issue a criminal summons. It should be noted that failure to comply may constitute a criminal offence unless good cause is shown why the taxpayer is not complying. But seek legal advice before being difficult with the IRS.

In accordance with Circular 230 Disclosure

International Tax Attorney, EA, US Tax Court Practitioner in the USA, Counsel of the High Court in South Africa, adjunct Professor of International Tax at Thomas Jefferson School of Law.

Twitter LinkedIn 

Comments are closed.