Your rights and responsibilities during an audit
Taxpayers are entitled to many rights during an audit; this includes the right to designate a representative and the right to appeal the findings of the audit. We encourage you to discuss any real or perceived violations of your rights with the auditor or auditor's supervisor.
The publications below provide information about your rights and responsibilities and additional information about what you should expect during an audit:
For additional information:
The Tax Department audits, investigates, and collects taxes from individuals and businesses. These enforcement activities help ensure that all New Yorkers pay their fair share of taxes.
As shown in an overview of the audit process, our auditors conduct a fair and unbiased review to determine if you paid the proper tax due. An audit may result in a bill for:
- additional tax, penalties and interest;
- the denial of a refund or credit you claimed;
- a proposed refund based on overpayments; or
- we may find no change at all.
We strive to minimize the impact of the audit on taxpayers, and we encourage open communications throughout the audit.
The best way to avoid an audit is to file your returns correctly and pay the proper tax timely.
How we select audits
Some of the reasons we select a taxpayer for audit include:
- Failure to file a return
- Failure to report income or sales
- Excessive credits or exclusions claimed on a return
- Incorrect of fraudulent refund claims or returns filed
- Differences found when we compare a return to information we obtain from others such as the IRS, banks, employers, and other businesses
- Results of prior audits (however, a prior or a current audit isn't necessarily cause to selected for audit again)
- Misuse of exemption certificates
In most cases, you will receive a letter asking for information. Less frequently, we set up an appointment to go over your records at your home or business, as appropriate.
We usually ask for additional information or records about one or more of the returns you fled during the last three years. In some cases, we may ask you to explain whey you didn't fine a return.
- maintain records to support the returns you filed; and
- provide these records if we ask for them.
We appreciate your cooperation during the audit and providing the records we request within the timeframe we propose. This will help us complete the audit more quickly. We grant most requests to extend the due date.
During the audit, you have the right to know what is going on and why. We encourage you to ask questions at any time.
Your right to representation
Most taxpayers resolve their differences with us on their own. However, you have the right to designate a representative and have a tax professional (accountant, attorney, enrolled agent, etc.) represent you and provide guidance.
If your representative will make legally binding decisions on your behalf, you must submit a completed Form POA-1, Power of Attorney. Otherwise, you should submit a completed E-ZRep Form TR-2000, Tax Information Access and Transaction Authorization. See Power of attorney and other authorizations and E-ZRep Form TR-2000, Tax Information Access and Transaction Authorization, to learn more.
Once we review the information available, you will receive our proposed audit findings or a bill. In most instances, you have the right to challenge the results of an audit. The notice we send you explains your protest rights.
If you agree with our findings
We will ask you to sign a Statement of Proposed Audit Changes (or similar document) that you agree. If you owe an additional amount and you don't pay it in full, we'll send you a bill.
- If you can't pay in full, we can usually work out an agreement for you to pay in installments.
- Interest and/or penalties will continue to increase until you pay the bill in full.
If you disagree with our findings
Indicate your disagreement on the Statement of Proposed Audit Changes (or similar document) and return the form to the address shown on the document.
- The auditor will review any additional information submitted and, if appropriate, send you a revised documents. If you still don't agree with the audit findings, we will send you a Notice of Determination or Notice of Deficiency for the taxes due.
- At this point, you may challenge the audit findings through either the Tax Department's Bureau of Conciliation and Mediation Services or through the independent Division of Tax Appeals. You must appeal estate tax cases through either the Tax Department's Bureau of Conciliation and Mediation Services or through the county surrogate's court.
Generally, you must file your appeal within 90 days of the date we issued the notice. To determine your time limit, refer to the Notice you received. You must submit a written appeal even if you have previously written to the Tax Department and objected to the position taken n the Statement of Proposed Audit Changes or similar document.
If you've underpaid your taxes, you may qualify for our Voluntary Disclosure Program. If you have not yet been auditor or billed for taxes underpaid and meet other conditions, you can come forward and pay the proper tax without incurring significant penalties and possible criminal sanctions. You can even apply online.