Revenue Agent's Report (RAR)
What Is a Revenue Agent's Report?
The Revenue Agent's Report (RAR) is a definite document that depicts an IRS examiner's audit discoveries and states the amount of deficiency or refund the agent tracks down the taxpayer to owe or be owed, individually. Taxpayers reserve the privilege to contradict a revenue agent's report and can decide to fight the agent's discoveries through a formal protest to the IRS Office of Appeals division by appealing to the U.S. Tax Court, or by paying the new assessment however at that point suing for a refund.
Understanding the Revenue Agent's Report
The Revenue Agent's Report (RAR) shows how any changes made to a taxpayer's liability was calculated, including the procedures applied, tests performed, information got, and the ends arrived at in the examination. The report (Form 4549: Income Tax Examination Changes) shows the changes to things of income, credits, and deductions an examiner or agent is proposing to the taxpayer's return notwithstanding the proposed taxes, punishments, and interest, if any. Form 4549 is likewise joined by Form 886A, which makes sense of the justification for the IRS changing a taxpayer's return.
The main concern of the RAR states whether the taxpayer underpaid, overpaid, or paid the right amount of taxes. In the event that the taxpayer overpaid, s/he gets a tax refund. If s/he underpaid, s/he must pay extra taxes, frequently with interest and punishments. In the event that an Internal Revenue Service (IRS) agent's report following an audit on a taxpayer's return brings about changes to the taxpayer's federal taxable income, the IRS will send a notice of conclusive determination to the taxpayer. After getting the notice, a taxpayer has 30 days to appeal the changes with the IRS Office of Appeals.
Results of a RAR
The IRS informs state tax specialists when it issues a RAR. State laws require that assuming that the federal government changes a taxpayer's liability, the taxpayer must file an amended state return inside 30 to 90 days following the last determination of the IRS audit. States expect that the taxpayer redetermine their state tax liabilities, considering the changes reflected in the RAR, and give notice to applicable state tax specialists with respect to any connected impact. States have this requirement in light of the fact that the tax liability for some random state depends on federal tax liability.
On the off chance that a taxpayer is considered to owe more federal tax than what was paid, the taxpayer probably owes more to the state too. This statute applies whether the taxpayer is an individual or a business. Assuming that the taxpayer pays tax in different states, the compliance cycle can be very difficult.
Features
- A revenue agent's report (RAR) subtleties the outcomes and discoveries of an IRS audit, including computations connected with any back-taxes that might be owed alongside penalty amounts.
- Taxpayers might challenge the discoveries in a RAR through tax court procedures.
- Assuming the RAR is unchallenged or maintained, delinquent taxpayers might subject to increased fines or prison time on the off chance that they fail to accommodate their tax situation.
