Royce A. Ellis - Page 15
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examination within the meaning of section 7605, and, as a result,
the subsequent examination performed by Agent Daniels was in
violation of section 7605(b).
SEC. 7605(b). Restrictions on Examination of
Taxpayer.--No taxpayer shall be subjected to
unnecessary examination or investigations, and only one
inspection of a taxpayer’s books of account shall be
made for each taxable year unless the taxpayer requests
otherwise or unless the Secretary, after investigation,
notifies the taxpayer in writing that an additional
inspection is necessary.
The Court finds that respondent’s Ogden Service Center’s
request to verify the discrepancy between petitioner’s 2001
return and Forms 1099 was not an examination or inspection of
petitioner’s books of account. See sec. 7605(b); Benjamin v.
Commissioner, 66 T.C. 1084, 1098 (1976), affd. on other grounds
592 F.2d 1259 (5th Cir. 1979); Miller v. Commissioner, T.C. Memo.
2001-55. Therefore, Agent Daniels’s examination of petitioner’s
2001 tax year did not violate section 7605(b).
D. Substantiation of Deductions
Respondent contends that petitioner did not substantiate the
reported Schedule C costs of goods sold or deductions for 1999
and 2001 and failed to claim or substantiate any Schedule C
costs of goods sold or deductions for 2000 in an amount greater
than allowed by respondent.
The taxpayer is required to maintain records sufficient to
enable the Commissioner to determine his correct tax liability.
See sec. 6001; sec. 1.6001-1(a), Income Tax Regs.
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Last modified: November 10, 2007