The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.
In a recent Florida Federal District Court Case, the IRS was granted the right to summon the accounting software file of a small business. This case did not involve a farm, however, the IRS has gotten very aggressive in demanding the actual accounting software file, especially Quickbooks and other common software accounting programs. Before the advent of these software programs, providing a print out of the actual accounting data was usually sufficient for the IRS during an exam.
Now, with most agents being able to utilize these accounting software packages on their computers, they are demanding a backup of the whole accounting software, even if there are years in the accounting software that are not under exam. Also, any comments in the comments, memo or notes section of your software would be available for review by the IRS.
This case decision is limited to this small district court jurisdiction, but you can be sure that the IRS will be very aggressive in taking this to the next level.
Just be careful what you write in your accounting software comments section. Remember, an IRS agent may be reading it in the future.
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