According to the IRS, a large part of the tax gap is caused by individuals underreporting their income tax by omitting taxable income or claiming erroneous or inflated deductions or credits.
Thomson Reuters has released a special report for tax professionals, Handling the Increasingly Common Automated IRS Examination, which examines two compliance programs the IRS uses to address underreporting: the correspondence examination, also known as the “corr exam,” and the automated underreporter or AUR program. In fiscal year 2013, the IRS conducted over 1 million corr exams and closed 4.1 million AUR cases compared to 344,000 field exams.
The report provides an overview of these compliance programs, addresses problems associated with automated examinations, and offers step-by-step guidance on how to respond to a letter or notice from the IRS.
To successfully deal with the increasing number of corr and AUR exams, Thomson Reuters also has introduced Checkpoint IRS Response Library — a comprehensive solution professionals can use to respond to their clients’ notices. Subscribers can quickly search by notice or form name or number, follow a step-by-step work plan, determine the best course of action, and estimate the time it will take to complete the engagement.
The library provides practical guidance for efficiently handling individual, business, and payroll post-filing issues and effectively dealing with the IRS. It covers more than 500 IRS notices, forms, and letters, offering real-world expertise in 58 chapters and 16 major areas. The library is updated quarterly by CPAs who have worked for the IRS.
“Representing taxpayers in these matters is not a fruitless exercise — taxpayers with representatives are nearly twice as likely to be found eligible for the earned income credit than those who are not represented,” said Shari Phelps, senior director of tax segments with the Tax & Accounting business of Thomson Reuters. “The expert guidance and tools in the Checkpoint IRS Response Library allow professionals and their staff to respond to IRS taxpayer notices and represent clients effectively and efficiently.”
Additional Thomson Reuters resources to help users navigate these complex rules and requirements, include:
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