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Introduction

This report is a culmination of the results of the work performed by a team of individuals from Examination, Collection, and the State of Oregon Revenue Department. The primary objective of this group was to evaluate compliance within a specific group of taxpayers and to develop an industry/project report to be used as a reference tool by State and Federal examiners. A team audit approach was used to maximize audit resources and develop communication lines between the State of Oregon Revenue Department, the Examination Division, and the Collection Division of the Internal Revenue Service.

The team consisted of four revenue agents from Examination, one revenue officer examiner from Collection, one tax auditor from Examination, one revenue agent from the State of Oregon, and an audit accounting aide from Examination. The audit techniques presented in this report were used by the examiners and have been found to be useful within this industry. The basic goals of the members of this team are outlined below:

1. To determine if compliance was a problem in this industry.

2. To determine if the contractors were filing all required Federal and State returns: Income tax, employment tax, and information returns.

3. To determine if the Federal and State returns filed by the contractors were substantially correct.

4. To make the appropriate recommendations to the proper State and Federal agencies, in order to strengthen voluntary compliance within this industry.

This report is based upon information gathered from a limited number of examinations. It is, therefore, not to be considered all inclusive or absolute as to its contents. The primary purpose of the report is to provide some general and technical information which should be useful to an examiner in the classification, pre-planning, and examination of returns selected in the reforestation industry.

The audit areas identified and discussed in this report were considered to be significant or unusual enough to warrant comment. The mere fact that an item is addressed in this report does not imply, in any manner, that it must or should be examined in every case. To the contrary, it is intended that the discussion for any one audit area will assist the examiner in deciding whether the item would warrant examination on a case by case basis. This handbook was developed as a reference tool and should be used as a supplement to the manual.