Tax Planning: Impact of proposed Tax Audit Adjustments

Question 1

Publication 556 states, in part, that if a taxpayer agrees with the proposed changes after the examination, the taxpayer can sign an agreement form and pay any additional tax he or she may owe. A taxpayer must pay interest on any additional tax

Answer 1

1) If the taxpayer pays when he or she signs the agreement, the interest is generally figured from the due date of the return to the date of the payment.
2) If the taxpayer does not pay the additional tax when he or she signs the agreement, the taxpayer will receive a bill that includes interest.
3) If the taxpayer pays the amount due within 10 business days of the billing date, the taxpayer will not have to pay more interest or penalties. This period is extended to 21 calendar days if the amount due is less than $100,000.