Tax investigation

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Tax investigation is an in-depth investigation processed by tax authority in order to recover tax undercharged in previous years of assessment. It means that the taxpayer is suspected regarding to tax evasion, or just by random sampling.

[edit] Reasons

• Taxpayer fails to lodge tax return.
• Taxpayer fails to provide information requested by the tax authority.
• Taxpayer submitted incorrect information to tax authority.
• The corporation's auditor makes a qualified auditors report.
• The tax return states an unreasonably low turnover, assessable income or profit percentage.
• Tax authority received report by a third party regarding the tax evasion.

[edit] Ways to quantify the tax undercharged

• Interviewing with the taxpayer.
• Field visit to the taxpayer's premises.
• Observation of the taxpayer's business operation.
• Examination of the books and records.
• Enquiry on third parties including bank balance confirmation.
• Asset betterment method calculation to find out the discrepancy, tax undercharged amount.
• Post tax audit meeting.
• The issue of tax assessment or additional assessment.
• Prosecution or an additional tax assessment.

[edit] See also

• Tax collection
• Tax administration