Audit Techniques Guides for Small Business

IRS’s effort to identify existing abusive tax shelters and increase voluntary taxpayer compliance rate has resulted to the publication of the Audit Techniques Guides (ATGs).

Do you want to know all about these ATGs? And where you can get a guide relevant to your industry, or profession? Read from our guide.

The Market Segment Specialization Program

The Audit Techniques Guides is part of the Internal Revenue Service's Market Segment Specialization Program, which is aimed at helping IRS agents identify existing abusive tax shelters and transactions to increase voluntary taxpayer compliance rate. This while making the tax audit process more efficient and effective.

The MSSP supplements the Taxpayer Compliance Measurement Program that was in existence from 1964 until 1998. The MSSP is considered more current and user-friendly. It came out at a time when the Internet is popular, making documents related to it easily accessible to the public. It implements changes in approach on how income tax returns are examined. Market segments are identified and district compliance was organized around it. The districts are task to implement the MSSP and conduct examinations.

The Basics of the Audit Techniques Guides

The ATGs contain a variety of information to assist agents how to conduct audits on specific industries or types of taxpayers. Generally, it seeks to develop highly trained examiners for specific market segments, such as an industry, a profession or an issue. The ATGs are based on previous papers, documents and guides by the IRS. These ATGs are available in the Web site of the IRS. Included in each ATG is a discussion of the tax law relevant for a specific market segment so that taxpayers can prepare document relevant to an examination.

The ATGs also serve as references on how IRS agents could develop tax shelter abuse cases. Taxpayers, who divert money through specially-established entities in a way that reduces tax owed to the government, could face penalties and get from the IRS bills for unpaid taxes plus interest. The ATGs also provide a basic idea on the various appeals procedures that taxpayers may avail of to settle disputes.

About the Alternative Minimum Tax Audit Guide

The AMT Audit Guide is one audit guide that is considered of wide relevance. This affects taxpayers of a particular income bracket who enjoy special deductions and credits for particular expenses. The alternative minimum tax is aimed at ensuring certain types of taxpayers pay at least the minimum obligation. It is separate income taxation but nonetheless operates in parallel to the regular income tax. AMT is either for individuals or corporations. You can check whether you are subject to the AMT in the IRS Web site. Between individuals and corporations, the former has more taxpayers. AMT for individuals seeks to ensure that those with significant income pay some amount of federal income tax.


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