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Old 11-26-2007, 01:55 AM
Arthur Kamlet
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Default Re: Purpose of a tax audit

In article <z0p2j.950$Vq.523[at]nlpi061.nbdc.sbc.com> ,
Mark Bole <makbo[at]pacbell.net> wrote:
- quote -

> oprah.chopra[at]gmail.com wrote:
> > I am reading a book called 'How to survive a tax audit'. From what I
> > gather, it seems the purpose of a tax audit is to find errors in your
> > deductions so that the government can collect major taxes that are
> > due.
> > > For this reason the auditor is only interested in possible errors

> > with large deductions so their time is justified in collecting the
> > due tax.
> > > Is this correct, or are audits also about checking compliance with

> > tax rules. Is an auditor going to waste hours of your time trying to
> > collect $50 in taxes because of innocent errors and
> > misinterpretations of tax law? [...]

> I can imagine more than a few situations where it would not take "hours"
> to identify $50 in uncollected tax. Correspondence audits, especially
> when initiated by a computer scoring process, may only take a few
> moments to identify many times that amount in potentially unpaid tax. I
> don't have statistics at hand, but I'm sure there are many audits which
> do not result in any additional assessment of tax, or which even result
> in a reduction in tax, so your theory as to the purpose of audits
> doesn't hold up.



Let me just add that any audit is simply to verify that the
return is prepared correctly. I have seen a number of audits
that end up finding additional deductions or credits.


But the IRS does have its own unpublished audit selection
criteria.

As far as playing Audit Lottery as you are suggesting, I
just won't go there. If you tell me that some part of
your return is not correct, either correct it or find
some other preparer.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

 
Old 11-26-2007, 12:09 AM
Mark Bole
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Posts: n/a
Default Re: Purpose of a tax audit

oprah.chopra[at]gmail.com wrote:
- quote -

> I am reading a book called 'How to survive a tax audit'. From what I
> gather, it seems the purpose of a tax audit is to find errors in your
> deductions so that the government can collect major taxes that are
> due.
> For this reason the auditor is only interested in possible errors
> with large deductions so their time is justified in collecting the
> due tax.
> Is this correct, or are audits also about checking compliance with
> tax rules. Is an auditor going to waste hours of your time trying to
> collect $50 in taxes because of innocent errors and
> misinterpretations of tax law? [...]


I can imagine more than a few situations where it would not take "hours"
to identify $50 in uncollected tax. Correspondence audits, especially
when initiated by a computer scoring process, may only take a few
moments to identify many times that amount in potentially unpaid tax. I
don't have statistics at hand, but I'm sure there are many audits which
do not result in any additional assessment of tax, or which even result
in a reduction in tax, so your theory as to the purpose of audits
doesn't hold up.

-Mark Bole

  #-1  
Old 11-25-2007, 11:42 PM
oprah.chopra@gmail.com
Guest
 
Posts: n/a
Default Purpose of a tax audit

I am reading a book called 'How to survive a tax audit'. From what I
gather, it seems the purpose of a tax audit is to find errors in your
deductions so that the government can collect major taxes that are
due.

For this reason the auditor is only interested in possible errors
with large deductions so their time is justified in collecting the
due tax.

Is this correct, or are audits also about checking compliance with
tax rules. Is an auditor going to waste hours of your time trying to
collect $50 in taxes because of innocent errors and
misinterpretations of tax law? While I am sure there are some who do
so, my guess is they are a small minority.

My reason for this discussion is so I can figure out how much
time/money I need to spend to have my returns done correctly, vs
mostly correct? If it will cost me more in tax preparer hourly fees
to pay a tax I can guestimate, should I stall pay the tax preparer
and have it done 'correctly'?

 

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audit, purpose, tax
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