Tax compliance officers (TCOs), who have categories GS-7, 9 and 11, perform in-person exams at IRS offices (sometimes referred to as office auditing). The IRS currently employs 572 TCO. TCOs receive more training than tax examiners and have some training in accounting. Generally, an audit conducted by a TCO requires an interview at the taxpayer's office, but does not require an on-site inspection of the taxpayer's books, records, or assets.
The types of topics selected for an office audit are income from tips, pensions, annuities, rents, scholarships, royalties and income not subject to withholding; deductions for business-related expenses; deductions for bad debts; determinations of the property base; capital gains versus regular income determinations and complex and diverse itemized deductions, such as losses due to accidents and thefts. IRS computers choose people to audit, but if those taxpayers respond, a person must review the documents. With fewer employees to do so, delays have increased in an already arduous process, according to several attorneys who represent taxpayers through the Low-Income Taxpayer Clinic program. It usually takes more than a year for a taxpayer's refund to be released, they said, even for those who are represented.
Democrats want to audit the United States, but Senator Ernst and Republicans are auditing the IRS, which has a history of hiring tax cheats. Most tax returns are received and processed by the IRS without further examination. However, there are a variety of factors that may attract the attention of the IRS, so that the return is more likely to be audited through a correspondence examination or that an auditor will be assigned to conduct further inquiries. In fact, the legislation will lead to increased auditing activity, but the claims of a new army of IRS agents and rampant audits of everyday Americans are misleading, tax experts say.
Low-income audits are generally more automated, allowing the IRS to continue these audits even with fewer staff. By going after people and companies that don't meet their tax obligations, the IRS is being fair to those who do. This trend has raised concerns about the potential for declining taxpayer compliance, as well as whether the IRS is fairly selecting taxpayers for auditing, as audit rates for higher-income taxpayers have fallen more than audit rates for higher-income taxpayers Low-income taxpayers. It's also important to maintain the level of voluntary compliance that the IRS has an auditing presence across all income groups, including the EITC.
The IRS can't simply shift resources from single-topic correspondence audit exams to more complex revenue audits because of employee experience and skill sets. Proving that his 4-year-old son had lived at the family's address for most of the year, as required by the EITC, was the hardest thing, but he did everything he could with his medical history, some documents from his daycare, and anything else he could think of. Generally, the IRS can audit returns filed within the past three years, but there are some situations where the IRS can audit even older returns. The purpose was to give the IRS more time to match tax returns with the appropriate W-2 forms in order to avoid erroneous income returns.
The IRS also offers mediation or can file an appeal if there is enough time left to meet the statute of limitations. Finally, this year, with the help of a legal aid lawyer from Prairie State Legal Services, Macaw, 50, was able to convince the IRS to release refunds. The IRS currently employs 969 tax examiners who perform correspondence reviews of simple individual Form 1040 returns. His refunds were withheld for several years in a row because the IRS doubted that his niece's three young children lived with him.
Depending on the topics of their audit, IRS examiners can use one of these technical auditing guides to help them. IRS officials said audit rates declined because of declining staff and because more staff time and experience are needed to handle complex, higher-income audits. .