Compliance Protocols

A tax audit is a thorough examination of an individual's or a business's tax returns to ensure compliance with tax laws and regulations. Understanding the tax audit procedures and policies can help reduce the risk of an audit and associated penalties. In this article, we will explore the different types of tax audits, their procedures, and the policies that govern them.

Types of Tax Audits

There are several types of tax audits, including Tax Return Examinations, Office Audits, Premises Visits, and Centralized Audit Proceedings. Correspondence Audits are conducted through mail where the tax auditor reviews the tax return and supporting documents sent by the taxpayer. Office Audits take place at the tax office. Field Audits are more comprehensive and involve the tax auditor visiting the taxpayer's premises to conduct the audit. Centralized Audit Proceedings involve a team of tax auditors conducting an audit using technology to review documents and conduct the audit.

Tax Audit Procedures

The tax audit procedure may vary depending on the type of audit and the tax authority conducting it. However, the following are the general steps involved in a tax audit:

1. Selection of Audit: The tax authority selects a tax return for audit taking into consideration discrepancies in the tax return.
   
2. Notification: The taxpayer is notified about the audit through a notification letter.
   
3. Collection of Documents: The taxpayer is required to collect and submit necessary tax-related documents including bank statements.
   
4. Review of Documents: The tax auditor reviews the taxpayer's supporting documents to verify the information disclosed in the tax return.
   
5. Inquiry: The tax auditor may ask further questions to ensure accuracy.
   
6. Verification: The tax auditor verifies the taxpayer's tax return by comparing it with the documents and records provided.
   
7. Audit Conclusion: The tax auditor 税務調査 どこまで調べる concludes the audit by either accepting or rejecting the tax return.