If audited by state will it affect your federal also.

[Jhford]

Is there a legal source you can point me to verifying that the taxpayer is not required to notify the IRS about a state audit which resulted in a tax increase?
Thanks

[NCperson]

I can point you to a source that states it is your responsibility to inform the IRS, assuming that whatever the state finds also increases your federal tax obligation.

When you sign (and this would include e-sign) your tax return, you sign a statement that says: 

"Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. " 

Look on Form 1040 where it says, "Sign here":

https://www.irs.gov/pub/irs-pdf/f1040.pdf

If it turns out that the State identified income that you did not report, it is likely it wasn't reported to the IRS either, so the statement signed that the return is 'true, correct and complete' is no longer accurate or truthful.  Best to contact the IRS and says 'Oops, I need to correct my tax return." Better you tell the IRS before the IRS finds it themselves. 

You have an obligation to correct your federal tax return if you later find something that would change what you fair tax obligation is, whether that is identified by a State audit or a mistake you caught yourself.

[Jhford]

Thanks for the reply. I understand the declaration, but I don't think it's legally dispositive, and is effective only as of the date it was signed. If so, perhaps there is no statutory requirement since most states share their audit information with the IRS, anyway. Therefore, why is it the taxpayer's obligation to do the IRS' work for it by reporting it?
Thanks again

[NCperson]

@Jhford  I can not prove what doesn't exist; I can only prove what does exist.

<<why is it the taxpayer's obligation to do the IRS' work for it by reporting it>>

then by that logic, why file the original return either? 

the obligation is because failing to do so under a voluntary compliance system would be tax evasion. 

From the IRS website:

The U.S. income tax system is based on the idea of voluntary compliance; it is the taxpayer's responsibility to report all income. Tax evasion is illegal. Some people try to evade paying taxes by failing to report all or some of their income.

https://apps.irs.gov/app/understandingTaxes/student/whys_thm01_les03.jsp

[ee-ea]

"Why is it the taxpayer's obligation to do the IRS' work for it by reporting it?"

When the IRS does do its 'work' a looong time will have passed and the interest will have grown. Tell the IRS and save money.

[livamoon]

does the state also receive a report when you make a voluntary amendment to federal tax return or when the federal AGi on federal return does not match the federal AGI on state tax return somehow (because of an error for instance)? If they do. automatically know when the federal AGI is different from the states than why would an exchange of audit reports even be necessary as the state could you adjust the state to the AGI of the federal. at any time if that info is exchanged? id be honored to get an answer from someone with your experience thank you