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posted Jun 6, 2019 5:09:16 AM

I received a request for business income or loss verification. Should I send them everything they asked for?

I'm a part-time musician who made close to $9K last year and had expenses of about $2800 due to some new instrument purchases.  I've been working as a musician for six years but this year Illinois sent me a "Request for Business Income or Loss Verification" and they want me to send a copy of Schedule C, 1099-MISC forms, sales slips, ledger pages of income and expenses, etc.  Any reason I shouldn't send them all of this info?  They say if I don't I'll be audited.  I did purchase the audit protection from Turbotax.  Let me know.  Thanks.

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1 Best answer
Level 13
Jun 6, 2019 5:09:20 AM

When you reply to the request you should provide the following:

  • A copy of your Sch C as requested
  • A copy of all income source documents that tie to your income reported
  • A copy of all expenses source documents that tie to each item
  • This appears to me to be an odd request.  I think Illinois is looking at the new instruments that you purchased and expensed.  Not sure how you reported those items.  Illinois does not follow federal bonus depreciation, but they do follow federal Section 179.  Just make sure when you provide the documentation you indicate the support behind how you deducted these items. 
  • Make a complete copy of everything you send to Illinois for your files.
  • Send your response and documents certified mail return receipt requested.  This costs a little, but it provides you with support that Illinois received what you sent.

3 Replies
Alumni
Jun 6, 2019 5:09:17 AM

In an audit, you would be required to produce the same documents, may as well send them now.

Level 15
Jun 6, 2019 5:09:18 AM

Yes, the audit protection only comes into play if you are audited ... right now the return is being processed and they are asking for supporting documents.  Failure to provide the docs now  will just draw out the process for months.

Level 13
Jun 6, 2019 5:09:20 AM

When you reply to the request you should provide the following:

  • A copy of your Sch C as requested
  • A copy of all income source documents that tie to your income reported
  • A copy of all expenses source documents that tie to each item
  • This appears to me to be an odd request.  I think Illinois is looking at the new instruments that you purchased and expensed.  Not sure how you reported those items.  Illinois does not follow federal bonus depreciation, but they do follow federal Section 179.  Just make sure when you provide the documentation you indicate the support behind how you deducted these items. 
  • Make a complete copy of everything you send to Illinois for your files.
  • Send your response and documents certified mail return receipt requested.  This costs a little, but it provides you with support that Illinois received what you sent.