P3-U10 · PART 3 · SOURCE CYCLE 2026-2027
IRS Examination Procedures
Only cards whose complete question and answer were checked against exact primary-authority evidence appear here.
Q1.A taxpayer in the United States receives a statutory notice of deficiency. How long does the taxpayer generally have from the notice date to petition the Tax Court?
90 days. Publication 556 states the general Tax Court petition period is 90 days, or 150 days when the notice is addressed outside the United States.
Q2.A statutory notice of deficiency is addressed to a taxpayer outside the United States. What petition period does Publication 556 state?
150 days. Publication 556 states a 150-day period when the notice is addressed outside the United States.
Q3.How does current authority treat identification of tax issue(s) with supporting details?
Before responding to an examination, identify the disputed tax issues and assemble facts and records that address them.
Q4.How does current authority treat financial documents and expense records (e.g., cancelled checks or equivalent, bank statements, credit card statements, receipts, brokerage records)?
Canceled checks, statements, receipts, and other contemporaneous financial records can substantiate return entries under examination.
Q5.What should a representative verify about legal documents (e.g., birth certificate, divorce decrees, lawsuit settlements)?
Legal documents are relevant when they establish status, rights, obligations, ownership, or the tax treatment of a transaction.
Q6.State the controlling rule for prior and subsequent tax returns.
Prior and subsequent returns can reveal carryovers, consistency issues, and facts relevant to the year under examination.
Q7.What must an EA remember about other substantive and contemporaneous documentation (e.g., corporate minutes)?
Contemporaneous business records are stronger support than an unsupported reconstruction prepared only after an IRS inquiry.
Q8.Give the practical federal-tax rule for business entity supporting documents (e.g., partnership agreement, corporate bylaws).
Entity agreements, minutes, and governing documents may be needed to establish authority and the substance of business transactions.
Q9.What official rule governs requesting an audit reconsideration (e.g., documents and forms)?
Audit reconsideration is an administrative process for reevaluating an assessment when the taxpayer supplies qualifying information.
Q10.How does current authority treat the IRS authority to investigate?
The IRS may examine relevant books, papers, records, and other data to determine the correctness of a return.
Q11.What must an EA remember about the IRS authority to fix time and place of investigation?
The IRS sets a reasonable time and place for an examination under the governing procedural rules.
Q12.Give the practical federal-tax rule for steps in the process (e.g., initial meeting, submission of IRS requested information).
An examination proceeds through notice, issue development and requested information, proposed findings, and the taxpayer's agreement or appeal options.
Q13.What is the key limitation involving interpretation and analysis of revenue agent report (RAR) (e.g., 30-day letter)?
A revenue agent's report and 30-day letter explain proposed changes and the route to request Appeals consideration.