What to Expect During an Audit

During an audit, taxpayers have the right to know what is going on and why. We encourage questions at any time during the audit to foster an understanding of our tax laws. In order to complete the audit timely, we ask for cooperation in providing the records accurately and timely. The following are important steps taken during an audit:

Step 1: Contacting the Taxpayer

The Audit Contact Letter is sent to the taxpayer, identifying the Revenue Agent assigned to the case.
A return contact page should be filled out with the entity’s contact information and sent to the Revenue Agent.

Step 2: Preliminary Conference

A preliminary conference is held to discuss the following:

The entity’s business activities
Determine the audit period
Confirm location, date, and time to begin field review
Arrange a plant tour (if applicable)
Answer any taxpayer questions

At this conference we also will explain the process to the taxpayer and make sure all questions are answered.

Step 3: Audit Review

The assigned Revenue Agent reviews all taxes applicable to the entity. Audit work papers are compiled by the Revenue Agent which will list the taxes examined and any pending assessment. At the conclusion of the review, preliminary workpapers are given to the taxpayer for review.

Step 4: Post Audit Conference

After a reasonable amount of time to review the preliminary workpapers, a closing conference is held to review and finalize the audit. During this meeting the following may be discussed:

The taxpayer may present additional support to adjust audit findings
Rhode Island General Laws and Regulations applicable to the audit review
Any questions or concerns
Any corrective actions that should be undertaken by the taxpayer

Step 5: Billing of Assessment

A Notice of Assessment is generated after the close of the examination and mailed to the taxpayer. As with all Notice of Assessments, the taxpayer retains the right to protest the assessment, if requested within 30 days.

Additional Information and Frequently Asked Questions

What is the taxpayer's right to representation?

While most taxpayers resolve any issues with the Division of Taxation on their own, taxpayers have the right to designate a representative and have a tax professional (accountant, attorney, enrolled agent, etc.) represent them in tax matters. If you decide you would like to have a designated representative, you will need to submit a completed Power of Attorney form to the Division of Taxation.

Please use the Power of Attorney Form (RI-2848) on our Other Forms page.

What are the taxpayer's rights and responsibilities during an audit?

Taxpayers are entitled to many rights during an audit; this includes the right to designate a representative and the right to appeal the findings of the audit (see Power of attorney and other authorizations). We encourage you to discuss any real or perceived violations of your rights with the auditor or the auditor's supervisor. You may refer to our Taxpayers Rights page for a list of your rights and responsibilities and additional information about what you should expect during an audit.

If you would like to have designated representative, please submit a completed Power of Attorney Form (RI-2848) found on our Other Forms page.

What is the statute of limitations?

The statute of limitations is the amount of time imposed by Rhode Island Law to issue an assessment for additional taxes, penalties, and/or fees.

Generally, the time limit of 3 years from the date you filed your return establishes the statute of limitations. However, the statute does not apply for the period if you:

Did not file a return
Had an excessive underpayment
Have an underpayment due to non-remittance of trust funds
Are found to be fraudulent

How can I report tax evasion and fraud?

Tax evasion or fraud occurs when taxpayers intentionally try to avoid taxes they owe. Tax evasion and fraud may look like:

failing to file a return,
failing to report total income,
failing to remit monies collected, and
selling untaxed liquor, motor fuel, and cigarettes.

You can report Tax fraud here.

Resources

What to Expect During an Audit

Contact Us

Audit and Investigation Section

Email:  [email protected]

Phone:  401.574.8962

Fax:  401.574.8916