Publication Date - July 2006

NOTE: This guide is current through the publication date. Since changes may have occurred after the publication date that would affect the accuracy of this document, no guarantees are made concerning the technical accuracy after the publication date.

Table of Contents / Chapter 2
Tax Code, Regulations and Official Guidance Search

Chapter One - The Audit Flow

• Purpose of Guide
• The Information Document Request
• The Pre-Audit
• The Initial Interview
• The Audit

The Information Document Request (IDR)

Audits of farms are helped by the use of specific Information Document Requests (IDR) and initial interview questionnaires. Examples of farm questions for IDRs are:

• Hours worked on the farm, including the spouse, especially if there is a potential Passive Activity issue.
• Detailed depreciation schedule.
• Records of all loans and repayments.
• Grower statements and other primary income records.
• Deferred Payment contracts, if applicable.
• Crop maps with acres, type of plants and year of planting.
• Crop reports including insurance damage reports.

 These are guides only for requesting information relating to different farming entities.  Always look to customize the IDRs based on local information, information in other chapters applicable to your taxpayer, and your specific knowledge of the taxpayer.

Try to use the front-loading technique, if possible. Front-loading is requesting certain items in the IDR be mailed to your office before the initial interview. In the case of a farmer, items to be requested up-front include:

1. Copies of prior and subsequent year returns.
2. Copies of shareholder or partner returns.
3. The working trial balance.
4. Listing of all related entities, including ownership percentage and business relationship.
5. The crop map.

By requesting this information before the initial interview, you can perform a productive pre-audit of the farmer and set a more accurate preliminary scope of the examination.