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540X Easy Reply Amended Return Pilot Program

We will soon begin a pilot program giving certain taxpayers the option of quickly concluding an audit when first contacted by us, if the taxpayer agrees with the proposed adjustments to their return. The 540X Easy Reply Amended Return Program is being introduced by the Tax Practitioner Unit, which focuses its efforts on less complex or single-issue audits.

The Tax Practitioner Unit currently begins most of its audits with a self-compliance letter explaining the:

  • Issue(s) being audited.
  • Applicable law.
  • Proposed adjustment(s).
  • Additional information a taxpayer can provide to us if they disagree with the proposed adjustments.

We will now include with our self-compliance letter a completed Form 540X showing the proposed adjustments, additional tax due, and any penalties. This gives a taxpayer the option of immediately concluding an audit simply by signing and returning the 540X Easy Reply Amended Return. Immediate payment is not required to participate in this program; however, taxpayers can reduce the amount of interest due by including payment when they return the Easy Reply Form 540X. Of course, if a taxpayer disagrees with the proposed adjustments, they still have the option of providing the additional information needed to show the correctness of their return.

By implementing the 540X Easy Reply Program, we hope to reduce the time and cost involved in completing an audit, both for taxpayers and us. This 540X Easy Reply Program is being introduced later this year. Based on the results, we will consider expanding this program to other types of audits.

Back to November 2009 Tax News