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EPCRS – Employee Plans Compliance Resolution System – Paul Gaukin CPA

sign that says retirement

The IRS established the Employee Plans Compliance Resolution System or EPCRS to help qualified retirement plan sponsors correct technical and administrative problems with their plans thereby retaining tax favorable status. This basically gives business the opportunity to stay in compliance with the IRS in regard to their qualified retirement plan and not have to run into unnecessary penalties. EPCRS Components There are three components of EPCRS, these include: 1. The Self Correction Program or SCP – This permits plan sponsors … Read more

IRS Audit Reconsideration Letter – Paul Gaukin CPA

The IRS gives taxpayers the opportunity to apply for reconsideration of an audit decision that they do not agree with. This process is generally considered to be an informal process and therefore does not interfere with normal appeals procedures. In order for a taxpayer to be able to apply for reconsideration of their audit decision, their return must have been filed accordingly. If the taxpayer has not filed a return, reconsideration will not be given to the taxpayer until they … Read more

IRS Engineer Specialist – Paul Gaukin CPA

drawing of engineer plan

In certain situations the IRS may need a special type of employee to come in when there are special types of problems within a business return audit. An IRS engineer specialist is usually brought in when help is needed to resolve issues involving basis, depreciation, amortization, fair market value of assets, expenditure discrepancies, research and development issues, and other types of similar issues. Once the IRS requests an engineer specialist to review a return and make a decision, anything that … Read more

Reviewing Tax Return Prior to IRS Audit – Paul Gaukin CPA

Time for Review - Clock

If you have been notified by the IRS that your tax return is going to be audited, it is important to review your tax return prior to the first meeting with the auditor. This is an opportunity for the taxpayer to establish questions and answers to issues that may be present within the return. It also gives the taxpayer a chance to change anything related to the return before the audit takes place. Filing an Amended Tax Return In the … Read more

IRS Gross Profit Test – Paul Gaukin CPA


In the case of auditing a business, the Revenue Agent may be interested in verifying gross receipts, inventories, and purchases. The IRS will do this in the event that inventories are a material income producing factor. This Revenue Agent will gather information from the business and apply a gross profit test to establish a ratio for the business. Once a ratio has been determined through using the gross profit test, the Revenue Agent will go back to prior years of … Read more

IRS Unreported Income Audit Probe

Board saying lost and found

In the event that a taxpayer is audited and the IRS believes there is unreported income that has not been stated on the tax return, they will do an investigation into whether or not they are correct in their assumptions. The IRS will generally ask the taxpayer a series of questions in an interview which may involve the taxpayer’s standard of living, their tax return information and their books & records. The IRS will use this information to compare what … Read more

Right to Explanation of IRS Audit Process

Bill of rights

All taxpayers have the right to be given before an examination begins a detailed explanation of how the audit will be conducted, their appeal rights and information about the Taxpayer Advocate office. This right is given to all taxpayer who are subject to any type of IRS examination procedure. Details of your IRS Audit Rights If the taxpayer is interested in more detail in determining the IRS audit process they can find more information by reading Publication 556 on the … Read more

Recording an IRS Audit

Folders full of documents

One of the not talked about keys to an IRS audit is being extremely organized and copying all documents that are given to the taxpayer, and created during an IRS audit. Many times the agent that is conducting an audit with request that the taxpayer send documents for review, it is extremely important that the taxpayer copy these documents and store them somewhere safe. Examining Documents by Revenue Agent Along with keeping copies of all documents given to the Revenue … Read more

Imposing Penalties in an IRS Audit


In any court or audit proceedings, the IRS must first come forward with evidence showing that it is appropriate to apply some penalty against a taxpayer before the actual court can move forward with administering the penalty. This does not mean that IRS needs to show the court any evidence involving reasonable cause or substantial authority though. It just means that initially, the IRS needs to show the court that it is appropriate given the evidence they have to apply … Read more

IRS Right to Representation & Form 2848


If you are ever subject to any type of interview or examination by the IRS, you must know your rights to have a professional represent you. The IRS has given taxpayers the right to be represented by attorneys, certified public accountants, enrolled agents, registered tax return preparers and other persons authorized to practice in front of the IRS under the Treasury Department’s Circular 230. Filing Form 2848 In order for the IRS to acknowledge your representative, you must file a … Read more