IRS Random Compliance Research Examination

[Wendy]

I am scheduled to meet with an auditor & client on Tuesday for a "random compliance research examination", and have never faced one of these before. I asked what was being examined and she replied that it was every line on the Sch C & Sch A! Lovely... Client is a contractor, keeps all records by hand and gives me handwritten sheets with totals paid to vendors, and gives proof whenever I request it. In order to make it easier/quicker for the auditor and us, I took all his checkbooks and input to QBooks, but am finding some variances with totals. What should I expect with this meeting...

Any helpful hints? Words of wisdom? I'm beginning to get nervous.

Thanx

Wendy

[JohnH]

Here's one discussion we had about the subject. I think there may have been others. Taxbilly provided some good links as well.

[ILLMAS]

Just wondering who are they auditing the client or the tax preparer? I hear compliance and research, why don't they just call it an audit, because at end they are going to have findings if the tax payer cannot provide support.

[MAMalody]

is this the new name for the TCMP audits. When I was an auditor, we used to do the TCMP audits. We literally looked at every crossed Ts and dotted Is. As an auditor they were kind of fun. As a taxpayer, they were a pain because everything was looked at. It was essentially an audit that was used to help determine the veracity of the DIF program. My experience was that about 70-80% were no changes. Hopefully, this will be your result. My advice would be to sit down with your client and start at the top of each form and go line-by-line and have him show you his verification of that figure. In that way your information will be organized and ready for the auditor and if there are any holes you will be aware of them ahead of time and prepared for it.