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Why Does The Internal Revenue Service Target Gas Stations For Tax Audits?
The service station has historically been the type of business where most of the income and many of the expenses are paid in cash.
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From Chapter 3-
Internal Revenue Service Auditors Will Definitely Review The Following To Determine If You Have Other Potential Sources Of Income-
Do you have / offer any of these services?
- Vending Machines
- Unbranded Pumps
- Tires
- Snow Plows
- Mini-Mart
- Lottery Tickets
- Licensing For State Inspections
- Cigarettes
- Car Wash
- Beverages
- Repair Bays
Internal Revenue Service Audit Agents know to look for the following:
- TECS - (Treasury Enforcement Communication System) money declared with Customs when taken in or out of the country selectively
- Sites that have a beer and wine license will sell much more merchandise than without the license
- Real Estate Records - for real estate sales and purchases. Contact collection employees for the best source of this information.
- Motor Vehicle Records - determine local or state procedures for securing this information
- Location and Sales - A good location site will have a high volume of sales.
- How many pumps? What are the grades of product being sold and are there any other types of products such as diesel fuel, propane, or blending products?
- Have internal controls been addressed? Are the internal controls currently in place the same as during the year under audit?
- Check the current selling prices and note variances between prices of gasoline at the taxpayer's station and other stations in the area.
- Be alert to any other service station(s) owned in whole or in part as an individual, partner, and/or shareholder.
- Bank Deposit Analysis
- Are cars for sale at the location?
