Tax Audit Help
December 31st, 2006
Question: For a federal tax audit, can you deny providing previous tax year returns?
I have a friend who is going through a major face to face tax audit next week.
I remember reading somewhere that if the auditor asks for a previous year tax return that you should refuse to do this. It went on to explain why and how do refuse nicely.
Does anyone know about this or remember reading this article. It was sometime in the last 1-2 months in a magazine and could have been in Money but I cannot find it now.
Answer: I’m assume this is a field audit and not an office audit. An office audit is where you’re coming to meet with the tax compliance officer. Yes, it is true that the agent/examiner can get the requested return internally as others have stated. The reason to get the return from your friend is because it will be a lot faster than order it internally which can take months in some cases. Thus, it could extend the audit longer. In addition, it gives the agent another reason to expand the exam to other years because he/she thinks your friend might have something to hide. In any case, keep in mind of compliance that the examiner need to address in the case.
see http://www.irs.gov/irm/part4/ch09s09.html4.10.5.3 (05-14-1999)
Prior and Subsequent Year Returns1. The taxpayer’s prior and subsequent years’ returns should be inspected for proper filing and to evaluate audit potential. The returns should be evaluated for issues related to the year under examination and for large, unusual, and questionable items.
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