Tax Audit Assignment Example | Topics and Well Written Essays - 1000 words

Tax Audit - Assignment Example Taxpayers facing an audit have to focus on the substantive issues to determine when the tax is due and often give little consideration to the procedural rules relating to the audit and appeal process. It is this gap of substance and procedure, compliance, and controversies that often subjects them to huge losses that would have been avoided. New York’s taxes like in many other states are self-assessed meaning that the burden of calculating the correct tax due falls on the taxpayer and not the taxing authorities. In C.I.R. v Lane-wells Co, the Supreme Court referred to our â€Å"system of self-assessment†, stating that itâ€Å"is so largely the basis of our American scheme of income taxation†. Hence it places a task on the taxpayer to complete returns accurately and on time. A tax audit is when the Department of Taxation decides to critically go through your tax returns and verify the accuracy of the incomes and deductions. For ABC partners the audit is on their partnerships 2012 tax return and their individual partner’s income tax return. This could be because the tax department needs more information validating their tax returns with the reasons such as, failure to disclose all your taxable income, claiming unearned income credit, failure to include additional income and making errors. The tax audit is to enforce and encourage voluntary compliance of the tax laws for an efficient running of the tax system