Revenue Administration: Taxpayer Audit--Use of Indirect Methods

International Monetary Fund

No 2010/005, IMF Technical Notes and Manuals from International Monetary Fund

Abstract: This technical note examines the use of indirect methods in a taxpayer audit. Indirect methods involve the determination of tax liabilities through an analysis of a taxpayer’s financial affairs utilizing information from a range of sources beyond the taxpayer’s declaration and formal books and records. Assessments are often based on circumstantial evidence indicating a reasonable estimate of the taxpayer’s correct liability. This note describes why tax administrations need to use indirect audit methods. Indirect audit methods commonly used by tax administrations are elaborated. The legislative requirements for the use of indirect audit methods are also analyzed.

Keywords: TNM; receipt; taxable income; audit program; method; administration; auditor; customs declaration; declaration of income; taxpayer audit; tax audit methods; indirect methods; indirect audit methods; indirect method; taxpayer audit--use; taxpayers figure; taxpayer claim; taxpayer challenge; taxpayer's book; cash expenditure method; method assessment; answers to question; risk taxpayer; Personal income; Administration in revenue administration; Tax administration core functions; Auditing (search for similar items in EconPapers)
Pages: 13
Date: 2010-04-14
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