Tax Dictionary – Payroll Tax Audit

IRS Definition

During an examination of an income tax, excise tax, or exempt organization return, the examiner will follow the established procedures to determine if the taxpayer is in compliance with employment tax filing requirements and will decide if an examination of employment tax returns is warranted.

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If a business’s tax return is under audit, the auditor will also look the business’s employment tax return to be sure the taxpayer is making timely federal tax deposits and is filing required payroll tax returns such as Form 940 and 941. If the auditor finds any areas of concern, he or she may refer these returns to an employment tax specialist for audit.

Learn how to handle an IRS audit.

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