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Tag Archive for audit

2016 IRS Data Book Shows Chances Of Being Audited

Ephraim Moss

The IRS has published the 2016 version of its annual IRS Data Book, which contains statistical information about the IRS and taxpayer activities during the previous year. The IRS Data Book helps illustrate the breadth and complexity of the U.S. tax system. According to the Data Book, during fiscal year 2016 (Oct. 1, 2015 to Sept. 30, 2016), the IRS collected overall more than US$ 3.3 trillion from taxpayers, processed more than 244 million tax returns and other forms, and issued more than $426 billion in tax refunds.

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When Flagged For An IRS Audit, Choose The Fast Track

Barry Fowler

If you’ve never been audited, you may not know that when the IRS audits you, it could take up to a year or more to complete the audit.

If you have been audited you know that audits are time consuming and fraught with endless worries.

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How Long Does The IRS Have To Audit A Tax Return?

A federal audit is, not surprisingly, an unwelcome event for most taxpayers. An audit is stressful and may result in a taxpayer owing additional money to the Internal Revenue Service (IRS). One question that many taxpayers have concerning federal audits is how long the IRS can take before auditing a tax return after that return has been filed. While the common perception that the statute of limitations on IRS tax audits is three years, the fact is that there are plenty of instances where the IRS can take much longer than that to audit one’s return. Below is a brief overview of the statute of limitations on tax audits in certain situations.
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IRS Transfer Pricing Audit Roadmap

Tom Kerester

Last month, the IRS updated its Transfer Pricing Audit Roadmap in recognition of the strategic importance of transfer pricing.

The IRS transfer pricing specialists in Transfer Pricing Operations (TPO) developed the Roadmap to provide the transfer pricing practitioner, whether employed in TPO or International Business Compliance (IBC), with audit techniques and tools to assist with the planning, execution and resolution of transfer pricing examinations.

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When The IRS Suspects You Of Under-Reporting Income

Barry Fowler

Have you suddenly become the unhappy target of an audit for allegedly under-reporting income to the IRS? Maybe you did under-report. Maybe you didn’t. Whether you did or not, your tax returns have waved some red flags at the IRS and you are now in their line of sight.

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Happenings Inside The IRS Under The New Administration

Last week in Denver, Colorado, the IRS quietly paraded out some of their race horses to share what is happening under the new administration. With Steven Mnuchin‘s most recent confirmation as Treasury Secretary and Commissioner Koskinen’s days numbered, a sense of being rudderless was anticipated.

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Trump’s NOL And The Complexity Of Taxation

Annette Nellen

Lots of news stories and excitement over the first page of three of Trump’s state tax returns for 1995 (NY, NJ and CT)! The New York Times broke the story: “Donald Trump Tax Records Show He Could Have Avoided Taxes for Nearly Two Decades, The Times Found,” New York Times, 10/1/16. It’s a big NOL carryover – over $916 million (almost $1 billion). Several observations:

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What Are The Chances You Will Face An IRS Audit?

Ronald Marini

After much worry and angst you successfully met the filing deadline for your tax return. Now you are obsessing about a new worry: Will that return be audited by the IRS?

Almost everyone dreads the thought of an IRS audit but thanks to continuing Congressional cuts in the IRS budget, fewer and fewer Americans will face an audit of their return. For the 83% of Read more

IRS Issues IPUs For CFCs & Subpart F Income, Which State Their Subpart F Audit Positions!

On October 13, 2015 we posted LB&I Agents Lose Autonomy To Centralized Office That Will Be Using Data to Identify Compliance Risks For Audit!, where we discussed that tax practitioners will face new questions from examination teams as the IRS selects compliance risks based on data, in the Large Business and International Division’s (LB&I) move from individual audits of multinationals to broader considerations involving risk assessment.

While LB&I is scheduled to implement the new structure in early calendar year 2016, in recently released new International Practice Units (IPUs), the IRS has provided additional guidance to its examiners on the audit of foreign base company sales income (FBCSI), a category of subpart F income. These IPUs focus on supply chain structures with foreign sales and/or manufacturing branches (including disregarded entities) that may be used by U.S. multinationals to avoid the application of the FBCSI rules. Read more

IRS Has NOW Been Given the Power to Improve its Partnership Audit Efficiency!

The Government Accounting Office (GAO) released it’s report GAO-14-732: on September 18, 2014 indicating that the IRS needs to improve its audit and efficiency of partnerships.

What GAO Found

The number of large partnerships has more than tripled to 10,099 from tax year 2002 to 2011. Almost two-thirds of large partnerships had more than 1,000 direct and indirect partners, had six or more tiers and/or self reported being in the finance and insurance sector, with many being investment funds.

Historically the Internal Revenue Service (IRS) audited few large partnerships. Most audits resulted in no change to the partnership’s return and the aggregate change was small. Read more

5 Common Myths About The Dreaded Tax Audit

Filing taxes is punishment enough without the vague threat of an IRS audit looming over our heads. For understandable reasons, the IRS insists on keeping the ins and outs of its auditing process on the murky side. How will you catch the bad guys if you give them the rule book first? But because of the sense of mystery around the process, it’s an area of regulation often misunderstood by taxpayers.

Here are a few common myths about the dreaded tax audit:

Myth #1: Only the wealthy get audited.

While it’s true that big businesses and the uber-rich are often targets of IRS tax probes, that doesn’t necessarily mean low- and middle-income workers are free and clear. The Read more

Read This Before Tossing Old Tax Records

Article Highlights:

• Reasons to Keep Records
• Statute of Limitations
• Maintaining Record of Asset Basis

Now that your taxes have been completed for 2014, you are probably wondering what old records can be discarded. If you are like most taxpayers, you have records from years ago that you are afraid to throw away. It would be helpful to understand why the records must be kept in the first place.

Generally, we keep tax records for two basic reasons: (1) in case the IRS or a state agency Read more

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