What are the Basics of Tax Audits in Georgia?
Have you ever wondered “What are the basics of tax audits in Georgia?” I’ll tell you.
Hi, I’m Jeff Fouts, a tax attorney located in metro Atlanta, with a state-wide, and nationwide, law practice helping clients who have serious Georgia tax problems.
So, “What are the basics of tax audits in Georgia?”
Audits conducted by the Georgia Department of Revenue are much like those conducted by the Internal Revenue Service. They select tax returns to audit on a random basis and based on certain red flags.
Georgia wants the tax returns that people file to be as accurate as possible. In their words, they want to “ensure compliance”. One way they achieve this goal is by auditing tax returns. Tax audits enable Georgia to:
- send a signal to taxpayers that honesty is the best policy or else you’ll be caught
- send a signal that your tax return should be prepared carefully and correctly, not just honestly
- catch people that commit fraud
- collect as many tax dollars as possible
Compared to the massive computer systems that the IRS has, Georgia’s systems don’t appear to be as robust, but don’t worry, Georgia has an information sharing agreement with IRS. The result is that Georgia gets a lot of the benefit of the IRS’ computer systems without actually having to own them. The IRS is able to help Georgia find taxpayers who needed auditing. One of the way the IRS does this is to cross check information it has been provided on you against the information you put on your tax return.
In most cases Georgia only has three years after you file the tax return to audit it, but if Georgia believes an incorrect tax return or tax report was filed with the intent to evade tax, or if you failed to file a tax return or report, Georgia can audit you or assess tax against you at any time.
The Georgia Department of Revenue gets its authority to conduct audits from the Official Code of Georgia’s Code Section 48-2-49. Periods of limitation for assessment of taxes.
If your tax return is selected for audit the Department of Revenue will send you a notice in the mail notifying you that your tax return has been selected. Oh happy day. The auditor will let you know what portions of the tax return are being examined, and he or she will ask you to provide the backup, or supporting, documentation for whichever of the exemptions, deductions, expenses, tax credits, or income you entered on your tax return that is being audited.
Audits by the Georgia Department of Revenue are conducted by the Audit Unit. The Unit conducts audits on:
• Income Tax
• Sales and Use Tax
• Withholding Tax
• International Fuel Tax Agreement Tax
• Motor Fuel Tax
• Unclaimed Property
Georgia says they usually schedule the actual audit meeting three to nine months after the taxpayer has received the audit notification letter. This is to allow you plenty of time to gather the needed supporting documentation.
A Georgia auditor is supposed to limit his examination to just the facts. By this I mean that the auditor is not supposed to attempt to punish you through the audit process just because he doesn’t like you.
After the auditor examines the records you provided, he or she will decide whether a change, called an adjustment, needs to be made to the tax return. If the auditor finds he needs to make adjustments to your tax return, a tax deficiency is assessed against you. In other words, they’re saying you owe them additional tax, along with penalties and interest.
You can challenge the auditor’s adjustments and the assessment by filing a written protest requesting a conference on the matter. The assessment can be also appealed to the new Georgia Tax Tribunal.
I need to warn you about an important law that can bite you if you’re not aware of it. If you’re a Georgia taxpayer and the IRS makes a change to your federal tax return and you end up owing the IRS additional taxes, Georgia has a law that requires you to file an amended tax return showing the IRS changes within 180 days to the Georgia Department of Revenue and pay the tax or work out a solution to settle it for less than you owe.
The Georgia law can be seen at O.C.G.A. 48-7-82. Periods of limitation for assessment of taxes; collection by execution; change or correction of net income.
The particular section is:
(e)(1) When a taxpayer’s amount of net income for any year under this chapter as returned to the United States Department of the Treasury is changed or corrected by the commissioner of internal revenue or other officer of the United States of competent authority, the taxpayer, within 180 days after final determination of the changed or corrected net income, shall make a return to the commissioner of the changed or corrected income, and the commissioner shall make assessment or the taxpayer shall claim a refund based on the change or correction within one year from the date the return required by this paragraph is filed. If the taxpayer does not make the return reflecting the changed or corrected net income and the commissioner receives from the United States government or one of its agents a report reflecting the changed or corrected net income, the commissioner shall make assessment for taxes due based on the change or correction within five years from the date the report from the United States government or its agent is actually received.
I hope this important video tip has helped you understand the Georgia Department of Revenue a little better and about how tax problems are solved. Chances are you have questions or concerns about your own particular tax problem. What I encourage you to do is pick up the phone and call me. I can answer your questions. Over the past 20 years I’ve represented clients all across Georgia, and in 50 states and 29 foreign countries, and I welcome your call. You can reach me at (888) 995-6785 or by email at firstname.lastname@example.org. I’m Jeff Fouts and thanks so much for watching. Have a wonderful day.