Individual Income Tax Audit Procedures. Robert Skala (Auditor) Michael Betar (Auditor)

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1 Individual Income Tax Audit Procedures Robert Skala (Auditor) Michael Betar (Auditor) 1

2 Individual Tax Audit Basic Audit Procedures and Flow Communication Between Parties Outcome of Audit 2

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4 Basic Audit Procedures and Flow Initial Contact Additional Information Request Notice of Deficiency Response Expectations Timeframe 30 days for information request 90 days for notice of deficiency Consent to Extend Statute Additional information request only 4

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6 Communication Between Parties Requested documents Federal Returns, Other State Returns, W-2 s Partnership, S-corporation, Trust Returns (Why?) Tax exempt interest statements Methods of communication Mail Cd or Flash Drive Secure Log-in site Fax Additional request for information (if needed) Letter mailed to taxpayer Contact accountant if power of attorney form allows Representation of Taxpayer Form (M-5008r) 6

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10 Outcome of the Audit Three Types of Outcomes No Adjustments/Accepted as Filed Notice of Deficiency Refund Taxpayer and/or Tax Professional will be Notified (If M- 5008r is Properly Executed) 10

11 No Adjustments/Accepted as Filed Based on Information Submitted, Tax Return is Correctly Filed Letter Sent to Taxpayer and/or Accountant Adjustments can Still be Made at a Later Date Within Statute 11

12 Notice of Deficiency Adjustments Made Based on Information Presented If no Response is Received, Adjustments Based on Information Available to Auditor Appeal Period (90 days) Notify Auditor if You have Information that will Change the Deficiency Deferred Payment Plan 12

13 Refund Adjustment Made Based on Information Presented Resulting in a Refund Explanation of Changes Sent to Taxpayer and/or Accountant 13

14 After Determination of Audit Appeal Period of Audit After 90 Day Appeal Period Expires 14

15 Appeal Period of Audit 90 Days to Appeal the Outcome of the Audit Notice of Deficiency Appeals Must be Sent to the Auditor or Conference and Appeals Branch in Writing Must Specifically State Reason for Appeal Must Provide Documentation Supporting Claim Interest Continues to Accrue on Unpaid Balances 15

16 After 90 Day Appeal Period Expires What Happens After 90 Day Appeal Period Ends? No Appeal Rights System Bill Generated for Unpaid Accounts 30 days to make payment Interest is Updated 16

17 After System Bill Generated What Happens if System Bill is Unpaid after 30 Day Period? Case is Sent to Collections Auditor no Longer has Involvement in Case Collection Fees will be Assessed 17

18 Refund Request from Audit Assessment Form A-1730 After 90 Day Appeal Period Must be Paid in Full Including Interest and Penalty Time Limit 450 days after 90 day appeal period expired (540 days total) 18

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20 Property Tax Relief Programs Alexis DeRosa 20

21 Property Tax Relief Programs Homestead Benefit Homeowners Only Property Tax Reimbursement Homeowners/Mobile Home Owners 21

22 Homestead Benefit 22

23 2014 Homestead Benefit Applications Mailed September 2016 No Changes to Eligibility Guidelines Deadline: November 30 Paid Out at a Future Date Will You be Moving? 23

24 Property Tax Reimbursement 24

25 Property Tax Reimbursement Eligibility Age 65/over or Receiving Social Security Disability Lived in New Jersey for 10 Years Owned and Lived in Home for 3 Years Property Taxes Paid 25

26 Property Tax Reimbursement Income Guidelines 2015 Income - $87,007 $70, Income - $85,553 26

27 PTR Pension Treatment 2012 Changes to Treatment of Pension Income New Jersey Taxable Pension (Line 19a, Form NJ-1040 Include Tax Exempt Retirement Income US Military Pension Disability Pension Roth IRA 27

28 Will my Client Actually Get Paid? Payments Began July 15 Budget Restrictions: Payments ONLY to Incomes $70,000 or less Incomes Over $70,000 No Reimbursement Keep Base Year 2016 PTR-2 Application 28

29 Prior Year Filings Eligible Applicants File Form, PTR-1 Include Supporting Documents Back Dated Base Year 29

30 Need Assistance? New Jersey Tax Practitioner Hotlines: Income Tax - (609) Business Inquiries - (609) Practitioner Priority Online, Contact Us Regional Information Centers Online, Homepage 30