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If audited by state will it affect your federal also.

Forum|Forum|7 years ago
June 1, 2019
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Best answer by MichaelL1

Yes. most of the time a State Audit will also impact the Federal return.

IRS and the States share audit reports.

The only times it will not impact the Federal is if it is a State only issue, like for example contributions to a 529 savings plan only go on a State return (not Federal).

MichaelL1Answer

Employee

Yes. most of the time a State Audit will also impact the Federal return.

IRS and the States share audit reports.

The only times it will not impact the Federal is if it is a State only issue, like for example contributions to a 529 savings plan only go on a State return (not Federal).

S

stevent812

False my state was audited but my Federal was not.

MichaelL1

Employee

I do not want to enter into a debate about this, as I said, "most" of the time when you are audited by the State Taxing Agency or by the IRS, the other agency will look at the audit report and if there if there additional tax (that exceeds their tolerances) you will get a audit report from the other taxing agency.

In your case, if you were audited by the State for income tax (and if there was a substantial tax change that also impacts the Federal return), you should at some point in the future get a letter with a IRS audit report. It can take many months from the State audit for the IRS to send out the Federal audit report.

I worked for IRS for 34 1/2 years, and part of that time I was a Fed/State coordinator that made sure these reports were shared. I also was in charge of correspondence audit at another point in my career.

DMarkM1

Yes. An audit at the state level does not necessarily trigger an audit at the federal level, but the information is shared by the taxing agencies. If the IRS sees a potential change in federal tax liability due to the state findings, they may ask for information/clarification via a letter.

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