Can the IRS now audit my QuickBooks files?

Mark Fearon | November 10th, 2010

In your next IRS audit, don’t be surprised if the agent requests a copy of your QuickBooks files instead of your printed general ledger. The agency has purchased 1,100 user license agreements for the software program and recently completed training its agents on the software. The IRS can also accept Peachtree accounting software files.

The IRS auditors intend to request back-ups of business taxpayers’ QuickBooks files as part of specific in-person field audits. The new audit process is part of the agency’s new embrace of technology, and the IRS said that it is responding to requests expressed in tax practitioner focus groups conducted in 2008.

The IRS said in a statement, “Electronic information management has become the standard in business and will now be used to enhance the examination process. The ability to conduct audits using these software options will be available on an increasing basis as revenue agents begin to work with the new software. It is anticipated that this new audit tool will increase the speed and efficiency of field examinations, reduce taxpayer burden and be a positive development for taxpayers, their representatives and the IRS.”

The IRS is limited in scope to certain years and certain issues, however it has not yet set or disclosed changes to the Internal Revenue Manual to reflect how electronic information would be used under these circumstances.

Your accounting professional can help you throughout the IRS audit process and help safeguard your financial information from additional audit exposure. Be sure to contact your accountant if you receive an IRS examination notice.

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