Category Archives: IRS Audits

Correspondence Exam Practitioner Concerns (or CEAP)

Correspondence Exam Practitioner Concerns (or CEAP) was a major undertaking that started in Correspondence Exam, which began in 2012. We gathered, evaluated, and addressed all feedback received about the Correspondence Exam process.   What are recent Correspondence Exam Practitioner Concerns? A large part of this effort was based on practitioner feedback that we gathered at… Read More »

Letter Received from IRS during Correspondence Examination

Letter Received from IRS during Correspondence Examination Although audit issues are identified and selected for examination through various automated and manual processes, a few different letters and notices are used for initial taxpayer contact depending on the issues being examined. Correspondence Examination uses these letters and notices to initiate the examination. They identify the issues under… Read More »

Correspondence Exam or Corr Exam IRS Audit

Correspondence Exam or Corr Exam is the most common type of IRS audit procedure. Corr Exam asks for verification of credits and deductions claimed on the tax return.  A major compliance program, Correspondence Examination asks for verifications of credits and deductions claimed on a tax return to determine if they are being reported correctly. The major areas… Read More »

Basic and General Information about Tax Audits

The IRS will audit hundreds of thousands of individual tax returns this year. Although that represents but a small percentage of all returns filed, this is little consolation if your return is among those selected for audit. But with proper preparation and planning, taxpayers should fare well through an IRS audit. You might be surprised that there… Read More »

What is IRS Civil Fraud Penalty?

Due to its steep rate, the civil fraud penalty is one of the most powerful tools that IRS has. It applies if any part of a tax underpayment is due to fraud, and the penalty equals 75% of that portion of the underpayment attributable to fraud. Although IRS has the burden of proving fraud by clear and convincing… Read More »

Notice CP75 and Earned Income Tax Credit

Taxpayers will receive a Notice CP75 because the IRS is auditing your tax return. The IRS will retain your refund until they finish the tax audit related to claiming the earned income credit. You must send the information that the IRS needs before the IRS can give a refund and pay you the earned income credit.  The CP75 letter… Read More »

Trust Fund Recovery Penalty (TFRP)

What is the Trust Fund Recovery Penalty (TFRP)? To encourage prompt payment of withheld income and employment taxes, including Social Security taxes, railroad retirement taxes, or collected excise taxes, Congress passed a law that provides for the TFRP. These taxes are called trust fund taxes because the employer holds the employee’s money in trust until making… Read More »

Automated Underreporter program IRS AUR Cases

The Automated Underreporter program. AUR cases are created from two primary sources: the Individual Master File, or IMF, that contains the individual tax return information filed; and the Information Returns Master File, or IRMF, that contains the payer information filed. After all current-year returns are processed, they are computer-matched to the corresponding IRMF file.   IRS… Read More »

Most Common IRS Tax Audit Compliance Programs

The two major compliance programs that involve reporting compliance issues are programs that look at the items that are reported or should have been reported on the tax return. They are Correspondence Examination, also referred to as “Corr Exam” throughout this presentation, and Automated Underreporter, or AUR. These programs share some similarities, but there are… Read More »