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Tag Archive for audit

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

What Is The Statute of Limitations On An IRS Audit?

The Statute of Limitations on an IRS Audit

Generally, the IRS can include returns filed within the last three years in an audit.  According to information contained on the IRS website, the IRS tries to audit tax returns as soon as possible after they are filed. This means that most IRS audits will be of returns filed within the last two years.

The IRS can choose to add additional years to an audit if a substantial error is identified.  In those cases, the IRS will not go back more than the last six years.

How Long Do I Have to Claim a Refund?

Just as the IRS must audit a tax return within a certain period of time, taxpayers also have Read more

If The IRS Sends You A Bill That You Can’t Pay… Please Don’t Have A Heart Attack!

A few years ago, a client came to me almost at the point of a nervous breakdown. He had been recently audited by the IRS and subsequently received a tax bill in the mail for over $180,000! After briefly perusing the documents he brought in, I quickly realized that something was significantly amiss with this tax bill. So I advised him not to panic, but to leave his documents with me. After comparing the audit adjustments with his documents, I decided that we had to go and pay the IRS a visit.

A couple weeks later, we were sitting down with the officer who had conducted the audit and his manager, and after reviewing the audit adjustments together, the amount originally assessed was eventually cut in half. The audit officer, who appeared to be a rookie, had apparently done a very poor job. Read more

What To Do When You Get An IRS Audit Letter

A thick white envelope with a logo that looks like a yeti is scratching the top of a scale while a leaf floats through the scene arrives in your mailbox and frankly, you’re scared. That logo only means one thing: a letter from the IRS. And once you open the letter, you’re even more freaked out, because it’s an audit letter from the IRS that frankly, you don’t quite understand. Yikes So what do you do?

Here’s a quick checklist of how to survive your IRS audit letter:

First: Don’t Panic

Take a deep breath. Getting hysterical and angry is a rational response to upsetting news, but an audit doesn’t mean you’ve done anything wrong. It simply means the IRS wants to Read more

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