Posts Tagged "auditing"

IRS increases correspondence audits

Posted on Oct 8, 2010

As part of its plans to increase audit coverage, the IRS will be doing more correspondence audits – notices mailed to taxpayers that typically focus on a single item on the tax return. Correspondence exams can be as simple as asking about a tax return data discrepancy or requesting a missing form. But the IRS is also using these audits to focus on other issues, such as employee business expenses, the earned income credit, charitable deductions, and the tax credit for buying a home. If you receive an IRS notice, don’t ignore it. Let your tax advisor know about it right away. The problem can be resolved in less time and with less fuss if an experienced professional is involved right from the...

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IRS audit plans revealed

Posted on May 25, 2010

The IRS has announced 2010 audit plans, which include audits in the following three areas:  * A three-year random audit program started by the IRS in 2007 will now be continued indefinitely. These random audits of individual income tax returns are used by the IRS to collect noncompliance data for adjusting general audit formulas and updating tax gap estimates.  * Another audit target: tax returns claiming the homebuyer tax credit. The IRS expects to open 200,000 audits by the end of 2010 to address potential fraud in claiming this credit. The Service will also be watching the recapture of the credit via public databases of real estate sales. Generally, those who sell a home within three years of taking the tax credit must pay it back.  * According to IRS Commissioner Douglas Shulman, the Service is planning to focus significant audit resources on individuals with millions of dollars in assets or income, including the business entities controlled by these high-income...

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Business Alert: IRS to conduct employment audits

Posted on Mar 9, 2010

The IRS is launching a three-year auditing project that will examine about 6,000 U.S. companies for compliance with employment tax obligations. The project is the first of its kind in 25 years, and its primary objective is to collect data to identify areas of noncompliance across all industry sizes and sectors, including nonprofits and governmental entities. Among the issues the audits will look at: * Classification of workers as employees or independent contractors, including executives rehired as consultants, dual status employees, and employee leasing arrangements. * Fringe benefits, including expense reimbursement arrangements and noncash benefits. * Executive compensation and fringe benefits, executive retirement contracts, golden parachutes, and stock options. The project will target 2,000 employers each year, with the first audit letters scheduled to go out this month or...

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