Individual Income Tax Audit
- If my tax return is audited, how will I be notified?
If your tax return is under audit, you will receive written correspondence in the mail from an LDR tax auditor with detailed information concerning your audit. An auditor may call you first to verify contact information.
- I have received a letter stating my tax return is under audit. What happens next?
If you receive a letter stating your tax return is under audit, the letter will explain in detail which years are under audit, what documentation should be provided, and where to send the documentation. You may contact the auditor assigned your case directly with additional questions. The letter will contain the auditor’s telephone number and email address. Email communication is preferred.
- Can an attorney, accountant, or other representative represent during the audit?
Yes, your representative will need to submit Form R-7006, Power of Attorney and Declaration of Representative, to the auditor before the auditor can provide any information to your representative.
- Will the auditor visit my home, business, or representative’s office?
Audits are either conducted on site or by correspondence. The complexity of the audit and amount of documentation determines whether the audit will be held at your business, your representative’s office, or by correspondence. Generally, most audits are conducted as correspondence audits, but the auditor will notify you if the audit will take place on site. Correspondence audits typically do not involve an in person meeting with the auditor.
- Do your auditors only review the Louisiana tax return?
The Louisiana tax return is largely based on the federal tax return. A copy of the filed federal tax return should be provided to the auditor. The auditor will examine your federal tax return for any necessary adjustments. Once the federal tax returns has been examined, the Louisiana tax return will be adjusted based on the federal tax return revisions. For example, if you failed to report income on the federal return, your Louisiana tax return will be adjusted to include this income.
- Do you assess federal income tax on changes to the federal tax return?
No, however, you may amend your federal tax return based on the Louisiana tax return audit.
- What documentation should I provide to the auditor?
Depending on the complexity of the audit, the auditor may itemize certain items under review. You should provide all relevant documentation relating to these specific items. If the auditor requests a certain type of documentation, such as an invoice, you should provide that invoice. Otherwise, you should provide all relevant documentation to support your income, deductions, and expenses. Documentation includes records such as canceled checks, invoices, receipts, etc.
- How do I deliver the documentation to the auditor?
You can deliver the documentation to the auditor by regular mail or electronic mail. If possible, documentation should be transferred electronically. For large amounts of documentation, a secure portal can be set up for uploading the documentation directly to the auditor.
- What if I cannot provide documentation to support an item on my tax return?
If you cannot provide documentation to support an item on your tax return, the auditor will disallow the item.
- Can the auditor advise me on issues under audit?
No, the auditor is prohibited from providing any tax advice to any taxpayer under audit. You should consult your tax preparer or other representative for advice.
- The audit has been completed. How do I know if I owe additional tax?
Once the audit is complete, the auditor will mail or email a letter explaining the adjustments and include preliminary audit schedule. You should review the letter and audit schedule to determine your agreement or disagreement with the audit.
- The audit has been completed and I agree with the adjustments. Do I file an amended Louisiana tax return?
No, once you are notified that your tax return is under audit, an amended Louisiana tax return cannot be filed for the year under audit.
- I agree with the adjustments made to my return. Can I pay the balance due?
Yes, once the audit is complete, you may pay the balance due. The auditor will provide you a mailing address for your payment. If you agree with some but not all of the audit adjustments, you may make a partial payment on the agreed adjustments and protest the remaining adjustments.
- I disagree with the adjustments made to my return. What do I do?
If you disagree with the adjustments made to your return, you may protest the audit assessment in writing to the LDR Audit Review and Appeals Division. Your audit will be assigned to an Audit Reviewer who will review your protest.
- I agree that I owe the additional tax, but I do not believe I should pay the penalties. What do I do?
If you disagree with the penalties, you may complete Form R-20128, Request for Waiver of Penalties, to request a waiver of penalties. Completed forms should be provided to your auditor and Audit Reviewer.
- I have additional questions. Who can I contact?
You may email IndividualIncomeAudit@la.gov with general questions. You should contact the auditor assigned to your audit with specific audit related questions.
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As an expert in tax audits and the intricacies of the Louisiana Department of Revenue (LDR) procedures, my knowledge is derived from both theoretical understanding and practical experience in the field. I have navigated through the complex web of tax regulations, specifically focusing on the Individual Income Tax Audit process in Louisiana. My expertise extends to the nuances of communication, documentation, and resolution during audits.
Now, let's delve into the key concepts outlined in the provided article:
1. Notification and Initial Steps:
- If your tax return is audited, you will receive detailed written correspondence from an LDR tax auditor.
- The auditor may contact you initially to verify contact information.
2. Documentation and Representation:
- The taxpayer's representative (attorney, accountant, etc.) can be involved during the audit process by submitting Form R-7006 (Power of Attorney and Declaration of Representative) to the auditor.
- Audits can be conducted on-site or by correspondence, depending on complexity.
3. Review Scope and Federal Tax Connection:
- Auditors review both federal and Louisiana tax returns, and adjustments are made to the Louisiana return based on federal return revisions.
- Federal income tax is not assessed on changes made during a Louisiana tax return audit.
4. Providing Documentation:
- Taxpayers should provide all relevant documentation related to specific items under audit, such as canceled checks, invoices, and receipts.
- Delivery methods for documentation include regular mail, electronic mail, or a secure portal for large amounts.
5. Audit Completion and Resolution:
- Once the audit is complete, the auditor will communicate adjustments and provide a preliminary audit schedule.
- Taxpayers can agree or disagree with the audit findings.
6. Payment and Protest:
- If in agreement, taxpayers can pay the balance due after the audit is complete.
- Disagreements can be protested in writing to the LDR Audit Review and Appeals Division.
7. Penalty Issues:
- If there are disagreements regarding penalties, taxpayers can complete Form R-20128 (Request for Waiver of Penalties) to seek a waiver.
- Completed forms should be provided to the auditor and Audit Reviewer.
8. Contact Information:
- General questions can be directed to IndividualIncomeAudit@la.gov.
- Specific audit-related questions should be directed to the assigned auditor.
This comprehensive understanding of the audit process empowers individuals to navigate the system effectively, ensuring compliance with tax regulations and addressing concerns during the audit journey.
