Similar to the IRS, the USTC conducts tax audits to verify the correctness of the amount of a taxpayer’s tax liability. The USTC will select items on your tax return, and you will need to provide relevant information to verify selected items. You have the right for someone to represent or accompany you to meetings during your USTC tax audit. To designate a representative, your auditor requires a completed USTC 3520, Power of Attorney.
When the USTC auditor has completed the audit, the auditor will provide his or her findings in writing and issue to you one or more of the following:
- A letter stating we accept your tax return or your claim for a tax refund as you filed it.
- A letter stating we deny or partially deny your claim for a tax refund.
- A Notice of Proposed Assessment, which indicates the additional tax we believe you owe us.
- A Notice of Overassessment, which indicates a refund we owe you.
- A Notice of Proposed Adjusted Carryover Amount, which indicates we changed a carryover item, but you owe no additional tax.
Interest accrues on unpaid tax liabilities from the original due date of the tax return until the date the USTC receives payment. If you filed a tax return for the year of the tax audit, you may prevent additional interest accrual by prepaying your additional tax. The USTC considers this payment to be a tax deposit. Interest continues to accrue on any unpaid tax balance.
The USTC often conducts audits of basis to determine the correct tax upon the sale of property. Often this comes into play upon the sale of a business or real estate property. It is important to keep all receipts and proof of payment when making expenditures for a real estate property and issue all 1099s that are necessary. In addition, you should keep meticulous records of any contributions to capital that you make to a business.
What if I do not agree with the results of my USTC audit?
If the USTC issues a Notice of Proposed Assessment and you do not agree with the proposed adjustment, you have the right to file a written protest to the USTC to appeal the proposed adjustment. You must follow the specific protest procedures that are outlined in your notice and file your written protest by the Protest by date on the first page of the notice. If the USTC does not grant your claim for refund, you have the right to appeal that action as well. You must follow the specific appeal procedures that are outlined in your refund denial letter. File your written appeal with the Utah State Board of Equalization within 90 days of the notice date of your denial letter.
Contact a Utah USTC Audit Tax Attorney
If you have been contacted by the USTC , you don’t have to take them on alone. We have extensive experience in resolving tax disputes with the USTC and can help guide you through the process to ensure that your rights are protected. Contact Tax Defense Counsel today for a free consultation with a Utah USTC audit tax attorney.