Tax investigation
Encyclopedia
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.
Tax evasion
Tax evasion is the general term for efforts by individuals, corporations, trusts and other entities to evade taxes by illegal means. Tax evasion usually entails taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities to reduce their tax liability,...
, or just by random sampling.
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.