IRS agents are being instructed to obtain a copy of the taxpayer’s QuickBooks data file for examinations. This will not be done in all examinations. If the taxpayer refuses to provide the file, thier suspicion level would be raised and a summons to obtain the information may be issued. The agents are instructed to review only the information for the year under audit unless they decide to expand the examination to prior years.
During a recent examination in December, the revenue agent requested a copy of the QB file and password. He told me that one of the things they will be specifically reviewing is the QB audit trail. He said they want to see if there were any significant changes to the transaction coding in the days leading up to the audit appointment (maybe beginning with the time period around the date of examination notification). Luckily for my client they had nothing to hide.
The IRS has purchased 1,500 to 2,000 licenses from Intuit and will have one agent trained and licensed per group to assist others in the examination of taxpayers who use QuickBooks
So be reminded that beginning with QB 2006, the “audit trail is always on”. If you keep everything on the up and up, you shouldn’t have anything to worry about.