Show Nav

IRS to Implement a Pilot Program Auditing Farm Expenses

The IRS will implement a limited pilot program auditing certain farm expenses on Schedule F. The IRS indicated it believes there may be compliance issues such as deducting expenses on the wrong form or deducting expenses actually belonging to another taxpayer.

The pilot will start with 50 audits of 2015 cases, and be conducted out of the IRS’s Brookhaven NY campus. It is expected to begin April 1, 2017 and conclude April 1, 2018. It will use the same filtering process as is currently used for Schedule C examinations.

Under the audit, farmers reporting expenses under Schedule F will be asked to provide documentation to show they qualify for the questioned expenses, and the IRS will determine whether they are properly reported on Schedule F. Although the initial pilot is limited in scope, it suggests that the IRS may be placing greater scrutiny on farm expenses reported on Schedule F.

See IRS Memorandum SBSE-04 – 0217-0014 (Feb. 27, 2017).

DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.

More from Business Minute