Glossary of Key Terms

A formal way for the Internal Revenue Service to make an educated guess about how much taxes you might owe. The whole purpose of a Substitute for Return is to arrive at a definite dollar amount of your tax liability, so that the IRS can begin collection efforts. The IRS uses its substitute tax return to issue a proposed assessment of taxes you owe. If you don't respond to the proposed assessment, that assessment may become final. Once the assessment becomes final, the IRS can now legally collect on the tax for a period of ten years

Is an IRS program that provides an independent system to assure that tax problems, which have not been resolved through normal channels, are promptly and fairly handled. Each state and campus has at least one local Taxpayer Advocate, who is independent of the local IRS office and reports directly to the National Taxpayer Advocate. The goals of the Taxpayer Advocate Service are to protect individual and business taxpayer rights and to reduce taxpayer burden. The Taxpayer Advocate independently represents your interests and concerns within the IRS. This is accomplished in two ways:

• Ensuring that taxpayer problems which have not been resolved through normal channels, are promptly and fairly handled;

• Identifying issues that increase burden or create problems for taxpayers: Bringing those issues to the attention of IRS management and making legislative proposals where necessary.

Internal Revenue Code Section 6672 (a).  To encourage prompt payment of withheld income and employment taxes, including social security and railroad retirement taxes or collected excise taxes, Congress passed a law that provides for the trust fund recovery penalty. This is used as a tool for collection of unpaid employment taxes.

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If you are a "responsible person" the IRS can apply this penalty against you immediately after you do not pay trust fund taxes in response to a notice and demand for payment. Also, the IRS can apply this penalty regardless of whether you are out of business or without assets.

Simply put, forensic accounting is accounting that is suitable for legal review, offering the highest level of assurance, and including the now generally accepted connotation of having been arrived at in a scientific fashion. That is, forensic accounting is sufficiently thorough and complete so that an accountant, in his/her considered independent professional judgment, can deliver a finding as to accounts, inventories, or the presentation thereof that is of such quality that it would be sustainable in some adversarial legal proceeding, or within some judicial or administrative review. Findings are based upon the scientific detection and interpretation of the evidences of phenomena introduced into the books and records of an accounting system (expansively defined) and the effects of such phenomena upon the accounts, inventories, or the presentation thereof. (Alternatively, if there is no impact on an accounting system, there is no accounting evidence, nor is there any effect upon the accounts, inventories, or the presentation thereof; and such situations are not within the realm of forensic accounting - where only the accountant is qualified to function.) The primary orientation of forensic accounting is explanatory analysis (cause & effect) of phenomena - including the discovery of deception (if any), and its effects - introduced into an accounting system domain. The primary methodology employed by forensic accountants is objective verification.