February 25, 2019

IRS Audit? Most likely audit results will be shared with your state taxing authority. Here's what to do.

IRS Audit


Have you been audited by the IRS, and the audit resulted in changes to your tax return(s) and tax due?

Don't forget to promptly amend any associated state tax and local tax returns to comply with the IRS audit results, and pay any state and local tax due.

Why?

Because if you don't, the state taxing authority will almost certainly send you a notice of tax due based on the IRS audit results, or may even open up an audit on your state tax return(s).  It's all due to the State Information Sharing Program between the Internal Revenue Service and most states.  In fact, the agreement is in place with 48 states and the territories of Guam, and American Samoa.  The only 2 states that do not currently participate are Nevada and Texas.

IRS Audit 

State Information Sharing Program


What tax information is shared?
  • Audit results;
  • Individual income tax return information;
  • Business tax return information; and
  • Employment tax information.
And it's not just one way sharing.  The IRS shares information with state and local taxing authorities, and the state and local taxing authorities likewise share information with the IRS.  So if you've undergone a tax audit on the state or local level that resulted in changes to your state or local tax return(s) and tax due, don't forget to promptly amend your associated federal tax returns and pay any tax due.  Waiting for the state or local taxing authorities to notify you will only result in greater penalties and interest, and may also result in another tax audit.  Yuck.

Questions about Tax Matters?
About Mary Rae Fouts, EA

Mary Rae Fouts, EA is an Enrolled Agent licensed by the Department of the Treasury.  This license  allows Mary to provide tax preparation, planning, and audit representation to taxpayers in all 50 states and US territories.  For more information visit Fouts Financial Group.

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