IRS Audits requesting Quickbooks files

[LCP]

I seem to recall the issue coming up a few years ago and there being a successful response short of handing over the entire file.

Anybody?

[ATSMAN]

What does the IRS letter actually say? They want the entire QB client file backup on a CD or just the portions under investigation?

In a previous audit we supplied hard copies of certain reports including source documents to make our point and auditor accepted that. Never sent anything in electronic format.

[Gretel]

I seem to recall the issue coming up a few years ago and there being a successful response short of handing over the entire file.

Anybody?

You only have to provide information for years in question and if IRS insists, you will need to give them a version of the QB file. QB has now the capability to extract certain years, though I never did this.

[AZ-Tax]

Does QB have copies of our files even though I use Desktop QB?

You only have to provide information for years in question and if IRS insists, you will need to give them a version of the QB file. QB has now the capability to extract certain years, though I never did this.

First, maybe I separate my QB accounts for the company on a per year basis but the last 5 years, all 5 years is in 1 single acct OR am I reading incorrectly Gretel's post? If and when the IRS wants your books prepared within QB for that particular tax year, you only give the IRS the P&L, Balance Sheet etc. as PDF files, correct OR does the IRS want your QB file for which they can restore on their QB software?

[Lion]

QB (I think 2012 and later) will save a file for the year(s) in question for you to give the IRS. The IRS now does request the QB file, so use the "stripped" file for that purpose. I have not done this, so contact QB support for help.

[DaveO]

I have had this request before but have not provided the file. Too much personal information in there. Customer and Vendor lists that the IRS has no right to see. I have provided an excel GL, income and balance sheet.

They want an admin level password so they could easily unlock other years if you attempt to restrict it. I have cited 4th amendment protections.

[TAXNJ]

4th

I have had this request before but have not provided the file. Too much personal information in there. Customer and Vendor lists that the IRS has no right to see. I have provided an excel GL, income and balance sheet.

They want an admin level password so they could easily unlock other years if you attempt to restrict it. I have cited 4th amendment protections.

Great idea.
Did citing the 4th amendment protections uphold?

[Uncle Sam]

QB For IRS

From what I recall from discussions at end of 2014 - IRS budget money cut funds to provide QB 2014 program -
so all you need to do is keep current with the most recent edition of QB - and IRS is locked out - even if you're
willing to provide it - IRS doesn't have the technology to obtain it.
Budget cuts do good things in our favor sometimes.

[TAXNJ]

Great

From what I recall from discussions at end of 2014 - IRS budget money cut funds to provide QB 2014 program -
so all you need to do is keep current with the most recent edition of QB - and IRS is locked out - even if you're
willing to provide it - IRS doesn't have the technology to obtain it.
Budget cuts do good things in our favor sometimes.

Great point. Where did you find that? Is that in the congressional record and is there a link?

[RightOn]

Does that mean every business under audit is supposed to provide QB files?

What about if it is a mom and pop business that does not use a computerized system for their bookkeeping?

[TAXNJ]

Irs authority - info for everyone

Here's the IRS answer. Still waiting from the posters that mentioned invoking the 4th and budget cuts

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Use-of-Electronic-Accounting-Software-Records;-Frequently-Asked-Questions-and-Answers

[DaveO]

The IRS has given the authority to itself. It has not been tested in a court of law as far as I know.
I find no law passed by Congress that authorizes the IRS to demand such records.
The assurance of the IRS in items 15 thru 17 are cold comfort in light of IRS employees being convicted of identity theft and improper use of taxpayer information.
I have written my congress person about this issue that I see as over reach by the IRS.

As to my 4th amendment position I provided the auditor with an exported excel spreadsheet file. I told her she was free to visit the client's place of business and obtain a working copy from them but I felt the request was over broad, unconstitutional and could not in good faith provide a copy from our system. My clients office was located deep in the bowels of a very old building in a rough part of town. A large steam boiler runs constantly about 20 feet from their computer. After assessing the situation she decided the excel file would be just fine.

I might add that there were some political undertones in this whole affair. The business founder had been approached by the city to sell his building. When he declined their lowball offer they threatened condemnation. He hired an attorney to respond to the city. A couple weeks later INS came to his home and arrested him charging him with some immigration irregularity 30 years prior. By the time the audit began he was already being deported. The remaining family members were understandably very suspicious at that point and I was going to be sure any data release was on their terms.

[TAXNJ]

DaveO. Here you go

The IRS has given the authority to itself. It has not been tested in a court of law as far as I know.
I find no law passed by Congress that authorizes the IRS to demand such records.
The assurance of the IRS in items 15 thru 17 are cold comfort in light of IRS employees being convicted of identity theft and improper use of taxpayer information.
I have written my congress person about this issue that I see as over reach by the IRS.

.

One of two court cases (see last paragraph for court's decision)

http://www.leagle.com/decision/In+FDCO+20111027H14

[DaveO]

Interesting, that case happened after the situation I related and I hadn't had a reason to revisit the issue since (thankfully). Thanks for the cite.