IRS audits focus on market segments.The Internal Revenue Service is implementing a new approach to auditing. IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. district offices are instructing their agents to apply a market segment approach to help them develop in-depth knowledge on particular industries and issues. The market segment specialization A career option pursued by some attorneys that entails the acquisition of detailed knowledge of, and proficiency in, a particular area of law. As the law in the United States becomes increasingly complex and covers a greater number of subjects, more and more attorneys are program (MSSP (MultiService Switching Platform) A high-end Cisco router that supports high-speed optical connections in the core of the network. See MSPP and MSTP. ) will replace auditing techniques that examine compliance problems within a particular geographic region or ones that look at income ranges for individuals or asset ranges for corporations. "Instead of an agent inventory consisting of a doctor, a gas station, an attorney and a grocery store, our agents will focus on the tax returns by industry," said Ray Smith, director of retail and services in the IRS Office of Compliance Specialization. "This is how the IRS intends to do business. Not only will we become more efficient auditors, but we will learn the problems and issues of each industry. We may learn there is a compliance problem because we didn't understand the industry and the application of particular code sections." Jeffrey L. Raymon, partner of Rosenfield, Holland & Raymon in New Bedford, Massachusetts New Bedford is a city in Bristol County, Massachusetts, located about 51 miles (82 kilometers) south of Boston, 28 miles (45 kilometers) southeast of Providence, Rhode Island, and about 12 miles (19 kilometers) east of Fall River. , and member of the American Institute of CPAs small business taxation committee, told the Journal that if the AICPA AICPA See American Institute of Certified Public Accountants (AICPA). was asked to develop the proper audit techniques for the IRS it would recommend something like MSSP. "When auditors have this specialized experience they can go through the audit quickly," said Raymon. "This will increase the profitability of the whole tax compliance effort." Raymon said the AICPA has not issued a position paper on MSSP because it has not created a controversy. John J. Monaco, director at Price Waterhouse, Washington, D.C., and former IRS assistant commissioner (examinations), told AICPA members attending the spring tax division meeting that MSSP has yet to "streamline" the audit process. Ray Smith told the Journal that MSSP has had a slow start, but that the service has experienced positive results in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden and Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , where MSSP was first implemented. "Agents will experience a learning curve with the first few exams in a particular industry, but that curve will drop off and we will get much faster and better at the audit," said Smith. The IRS has issued program guides explaining how agents should examine taxpayers in particular industries. "Some agents may not have enough expertise," said Smith. "The IRS will train them or at least give them the applicable MSSP program guide." RELATED ARTICLE: Published Market Segment Specialization Program Guides * Air charters. * Attorneys. * Architects. * Taxicabs. * Bed & Breakfasts. * Mortuary--Cemetery. * Rehabilitation rehabilitation: see physical therapy. tax credit. * Entertainment: Music industry. Foreign athletes and entertainers. * Gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by retailers. * Trucking industry. * Passive activity loss. * Resolution trust corporations. * Cancellation of indebtedness: Wine industry. Bars and restaurants. Source: Internal Revenue Service |
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