Investigation essentials

• Author: Nicholas L. Bourdeau
• Pages: 229-256

15-1

15-1

Chapter 15

Investigation Essentials

TABLE OF CONTENTS

§15:00 THEORY

§15:10 STARTING THE INVESTIGATION

§15:20 BATTLE LINES

§15:30 AVERAGING

§15:40 BUSINESS LOSSES

§15:40.1 Battle Lines

§15:50 TIME PERIODS TO INVESTIGATE

§15:50.1 Battle Lines

§15:60 CHANGES IN BUSINESS OPERATIONS DURING DIVORCE

§15:70 BUSINESS TAX RETURNS VERSUS THE IRS

§15:80 INTERVIEWING

§15:80.1 Battle Lines

§15:90 GETTING INFORMATION FROM OTHER SOURCES

§15:100 VARIANCE ANALYSIS

§15:100.1 Battle Lines

§15:110 INTERNAL CONTROL

§15:120 CREDIT CARDS

§15:130 MATERIALITY

§15:130.1 Battle Lines

§15:140 THE INVESTIGATION

FORMS

QUICK TAKE

The determination of economic income for self-employed individuals or wage earners

is the crux of all child support investigations. Determining the income for self-employed

individuals is probably the most taxing type of engagement for child support investigators.

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§15:00 The Determination of Income for Child Support 15-2

§15:00 THEORY

Self-Employed

Business owners will make a representation of

the amounts of income they earn from their busi-

nesses for the purpose of determining child support.

This is normally in the form of one or several tax

returns. It is the job of the investigator to insure that

the income reported is a fair representation of the

income available to the parent to pay child support.

This means that the investigator will be attempting to

insure that all of the income of the business has been

reported and all of the expenses that were claimed

were associated with the operation of the business.

The investigator will also be insuring during the

course of his or her investigation that the economic

income being determined is in compliance with local

regulations defining income for child support.

Casual bookkeeping procedures, lack of internal controls, and high incentives for not com-

plying with standard bookkeeping procedures and tax regulations make the area challenging.

However, whether the parent is self-employed or a wage earner, there are common tactics

and procedures for getting and dealing with the necessary information.

Where appropriate in this chapter, the sections are divided into discussions of Self-Employed

and Employee parents. Since self-employed parents cause investigators the most difficulties, the

Self-Employed sections are used to describe the problems and solutions. The Employee section

is then used to describe how the topic relates specifically to a parent in an employment situation.

WHAT YOU SEEK

Self-Employed

All of the tax returns, books, records, and supporting documentation associated with a

business can come under review in a self employed investigation. That is, documentation

evidences business activity. Any activity that the business performs can produce an adjust-

ment of income available for child support.

Employee

The information for a wage earner is usually more limited because the financial activities

of an employee are generally more limited. Investigators will seek any and all information

describing the financial relationship between the employee and his or her employer.

RESOURCES

Self Employed

Tax returns

The books, records and other supporting documentation of the business

Bookkeeper

Owner

Accountant (tax return preparer)

Employees

Spouse of business owner

Employee

Tax returns

W-2s,

Pay stubs

Benefit statements

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