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Business information matching, including Form 1099-K matching, is a pilot program for the IRS. The IRS has released the letters on its Web site, but it hasn’t provided any details on how it will propose additional assessments.
However, the IRS is attaching Publication 3498-A, The Examination Process (Examinations by Mail), to most of the letters. This indicates that the IRS intends to assess additional tax using deficiency procedures -- similar to how the IRS assesses tax in CP2000 individual under-reporter inquires and audits.
Jim Buttonow, CPA, CITP, is vice president of product development for Beyond415, a Web-based technology for IRS practice and procedure made for tax professionals. He is also a former IRS large case team audit coordinator who worked at the IRS for 19 years. Reach him at JButtonow@Beyond415.com or follow him on Twitter @Jim_Beyond415.