what is tax audit report

what is tax audit report

1 year ago 40
Nature

A tax audit report is a document prepared by an auditor after completing an audit of an individuals or organizations tax returns. The report shows the changes the auditor is proposing to the tax return, along with the proposed taxes, penalties, and interest. The report is generally prepared on Form 4549. The report also includes a Form 886A, which explains why the IRS is changing the return. The audit report is sent with a letter that gives the taxpayer 30 days to appeal the changes with the IRS Office of Appeals. The purpose of conducting a tax audit is to ensure that the taxpayer has correctly reported their taxes and to maintain the accuracy of their books of accounts. Tax audits are conducted by the IRS or state tax authority to ensure that taxpayers have adhered to tax laws and calculated their taxes correctly. Tax audits are rare, especially among middle- and low-income earners, and are usually triggered by a suspicion of understating reported sales or when the sales tax return filed with the state doesn’t match what was reported to the IRS. If a taxpayer is selected for an audit, the tax authority will notify them by mail, and the audit may be conducted via mail or in person. During the audit, the auditor will review the taxpayers records to determine whether taxes are being correctly reported. If the taxpayer disagrees with any of the items on the report, including penalties, they should consult their tax professional for next steps.

Read Entire Article