IRS Audits of Individual Retirement Accounts

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., in Woodbury, New York
• Pages: 3-4

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IRS AUDITS OF

INDIVIDUAL

RETIREMENT

ACCOUNTS

The IRS has a great deal of infor mation regarding IR A accounts. Much

of this information is received from financial institutions that maintain

these accounts.

Each year Forms 5498 are filed with t he IRS that give the IRS a

great deal of data regarding IR A accounts.

Forms 5498 together with the Forms 1099-R provide the IRS w ith

a starting point for an IRS IRA audit progra m.

The IRS uses a number of methods to determine violations of the

IRA ru les. These methods include the following:

• Automated Underreporter Program (AUR). This is a matching

program whereby the IRS ca n compare IRA information that is

received from financial institutions with the taxpayer’s income tax

return.

Author’s Note

I was recently shown an IRS t ranscript regarding a tax payer’s IRA going

back to December 31, 2002, that indicated the value of all the taxpayer’s

IRA accounts at each year end, the computation of the required mini-

mum distribution amount, and the amount reported on the individu-

al’s income tax return. The short fall amount in the IR A distribution

amount was readily determinable.

In such a case, the IRS has the capacity to easily determine whether

or not a taxpayer for the most part has received a t imely required mini-

mum distribution.

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