Commentary on the IRS Child Care Provider Audit Technique Guide

Commentary on the IRS Child Care Provider Audit Technique Guide By Tom Copeland, JD Introduction On April 17, 2009 the IRS published a revised edition of the Child Care Provider Audit Technique Guide. Read the Guide [www.irs.gov/businesses/small/article/0,,id=206004,00.html]. This Guide was written to help instruct IRS auditors how to conduct an audit examination of family child care providers. It also identifies the unique tax issues and business practices of family child care providers. In 2000 the IRS published the first edition of Child Care Provider Audit Technique Guide. This Guide is part of the IRS Market Segment Specialization Program, a series of IRS Guides that focus on particular business industries. This second edition of the Guide is a major improvement on the first edition. It offers a greatly expanded explanation of key tax issues and clarifies a number of points in ways that are favorable to family child care providers. Notable changes include: An expanded section highlighting the importance the IRS places on looking for unreported income in this field. The clearest explanation in any IRS publication of how to report Food Program reimbursements as income. A new section on the use of the standard meal allowance rule for claiming food expenses. An expanded section on how to allocate expenses for items used for both business and personal purposes. A detailed discussion of how to calculate the business use of home percentage. ...