Required filing checks is a procedure undertaking by the IRS during an audit to give consideration to whether all tax aspects involving the taxpayer’s sphere of influence and responsibility. This includes the inspection of prior year & subsequent tax returns, information returns, and the determination as to whether the taxpayer maintained adequate records.
Tax Return Audit Required Filing Checks
The following are generally what the IRS will wish to inspect:
1. Prior and subsequent tax returns are inspected for audit potential. All returns that are reviewed and have the same issues as in the years examined will be pursued when appropriate.
2. Related returns are inspected for audit potential. It is important to review the returns yourself prior to the audit to find deductions that may appear to be duplicative.
3. Other filing requirements including employment tax, excise tax, and information returns and whether they are in compliance with the IRS requirements for those returns. Employment tax, engineering, computer audit, and other applicable issues are considered and appropriate referrals are made.
Within the examination standards of the IRS provides a roadmap that an agent will follow when handling these required checks. This will help the taxpayer conduct a thorough review of the return under examination to uncover likely issues and help provide support and explanation at the first meeting. This can help satisfy the examiner and avoid a more in depth look at the issues of the examination.
Required Filing Check Questions
While preparing for the audit, the taxpayer should consider such questions as:
1. Whether the responses given in regard to unusual items should be prepared before the audit begins in anticipation of the issue being raised by the examiner.
2. Whether any issues that were not listed by the examiner in the initial document request should be reviewed.
3. Whether there are any indications of unreported income.
4. Whether prior year and subsequent tax returns should be reviewed and to what extent.
5. Whether the taxpayer should go alone to the examination or have their legal representative attend.
6. The likelihood that the examiner will raise the issue in regard to whether the reported income can support the taxpayer’s apparent standard of living.
These questions and procedures should be examined thoroughly prior to meeting with an IRS examiner for the first time. It is best practice to seek the best legal consul that you can afford before taking on the IRS.
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