Audits - DRAFT THE TAX AUDIT 1. Tax Audit - IC 71-14; IC...

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THE TAX AUDIT 1. Tax Audit - IC 71-14; IC 73-10 (a) Overview Following the initial assessment of a tax return, the CRA selects certain returns for more detailed examination or audit. The Agency conducts three types of audits : office audits , in which taxpayers (generally individuals) are requested to submit responses to written queries from CRA employees, frequently supported by further documentation of specific items on the tax return; field audits , which are primarily business audits conducted by more experienced CRA auditors at the premises of the taxpayer; and special investigations audits conducted by the Special Investigations branch of the CRA. These audits are an extensive review of questionable transactions and/or taxpayers reported to Special Investigations by field auditors. Suspected cases of tax evasion are handled by the Special Investigations unit. (b) Legal Restrictions The following provisions govern the conduct of a field audit. (i) Right to Inspection - ITA 231.1 Agency representatives are allowed to inspect, audit or examine the books and records of a taxpayer, and at any reasonable time, enter any premises where a business is carried on, property is held, or records maintained, and may require all reasonable assistance of the taxpayer or any person on the premises necessary to conducting the audit. However, CRA representatives may not enter the home of a taxpayer without the taxpayer’s consent or without a court-ordered warrant. (ii) Search and Seizure - ITA 231.3; ITA 231.5 Upon receipt of a warrant, departmental representatives may enter any premises, search for and seize any documents or things as evidence relative to the commission of an offence, and maintain the documents or things until the conclusion of the investigation. The taxpayer may obtain access to the documents at any reasonable time and obtain copies of the documents at the Minister’s expense. (iii) Solicitor-Client Privilege - ITA 232 Not infrequently, tax auditors are required to visit the offices of lawyers when investigating a tax case. Lawyers generally claim solicitor-client privilege in such circumstances. Tax auditors may seize records in the lawyer’s office and seal them without examination. Approval of a judge is required before these documents can be examined by the auditors. Accountants cannot claim such a privilege.
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This note was uploaded on 02/19/2012 for the course ACCT 4454 taught by Professor Barry during the Spring '12 term at Saint Mary's University Texas.

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Audits - DRAFT THE TAX AUDIT 1. Tax Audit - IC 71-14; IC...

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