TCMP audits

[dyne]

The old TCMP audits have been replaced with a new NRP program which begins individual income tax audits in 2008. The old TCMP audits were initially supposed to only be performed one year to obtain statistics to program the DIFF computer system to aid IRS in selecting returns which needed to be audited. But this TCMP project continued
for years until recently. Since the returns selected for TCMP audits were pulled at random,
the majority of these returns were simple and there was nothing much to audit. Auditors
were expected to question virtually everything and require proof of everything. They were
a pain for the auditors and the taxpayers. Perhaps the NRP audits will be an improvement over
the old TCMP. They should do away with the entire project. Forty
years of such audits should have obtained sufficient statistics.

[Mark Goldberg]

Nrp

The first round of NRP audits was held for 2001 individual returns. I had one.

[dmj4]

Mark

Can you tell us more about that audit? How it was selected, how involved?

[Mark Goldberg]

Nrp

The exam went over every item on the return. The examiner went over all receipts for the taxpayers business and rental property. I have no idea why it was selected. The client was not well prepared so the exam was painful and I spnet maybe 20 hours on the exam.
When all was said and done my client ended up with a refund. The errors in his favor were less than the mistakes in the IRS's favor.

[DaveO]

Hate to drag this old thread up but I have one of these. And like Mark's client mine is ill prepared with spotty records. I have no doubt he will owe due to his lack of records. My question is how likely is it that the audit will be expanded to other years. If this was a regular audit I would know the answer but is the TCMP a different beast altogether?

[TaxGuyBill]

I had one this spring. It was a random National Reporting Program (NPR) audit, but it wasn't much more detailed than a regular audit. It was nothing like the old TMCP audits that were absolutely horrible.

The auditor told me that if she finds any significant changes, she is practically required to open up other years (and that's what happened).

However, I suspect that results vary tremendously depending on the auditor that you get. Mine was very friendly and easy-going, so she didn't nit-pick or go through every exact detail. She even accepted the mileage estimates without solid documentation and some reconstructed expenses without any question. Again, it will depend on the auditor.

[taxea]

Just a tip. I have learned to put notes on practically everything by either detailing calculations on the return line or using the notes option in my program. I also scan every client document and put it in a digital client file. This way if the return is ever audited I already have the answers and documentation needed.
The only thing I don't deal with is the client's receipts and invoices. I require them to fill out my worksheets which I keep. I have also learned not to get rid of anything. I have digitize everything and keep it all for just in case. Believe me, this has saved mine and my clients on many occasions.

[Uncle Sam]

NRPs

NRPs are NOT always 100% audits where they audit every item on the return.
My experience has been that the IRS will focus in on a couple of items - such as certain itemized deductions,
and ask for 100% documentation of those items, then have the clients answer an extensive questionnaire.