Revenue Ruling

Ruling Number:19-2005-1
Tax Type:Corporate Income Tax; Individual Income Tax
Brief Description:Determination of federal adjusted gross income for audit purposes.
Approval Date:06/03/2005


The effective date of this Revenue Ruling is June 3, 2005. On and after June 3, 2005, when conducting an audit of the taxpayer’s books and records, the Department’s auditors are not bound by the amount reported by the taxpayer as federal adjusted gross income on the taxpayer’s federal income tax return. Such amount is subject to verification in the audit process.

Determination of Kansas taxable income starts with the correct amount determined for the taxpayer’s federal adjusted gross income. See, e.g., K.S.A. 79-32,117. K.S.A. 79-3226 provides in part: "As soon as practicable after the return is filed, the director of taxation shall examine it and shall determine the correct amount of the tax" and may notify the taxpayer if additional tax is due.” K.S.A. 79-3233 provides in part: "For purposes of ascertaining the correctness of any return . . ., the secretary shall have power to examine, or cause to be examined by any agent . . . any books, papers, records or memoranda, bearing upon the matters required to be included in the return."

The Secretary of Revenue, Director of Taxation, or an agent or designee thereof, may review the taxpayer’s books and records and interpret applicable federal tax provisions to determine if the taxpayer reported the correct amount for federal adjusted gross income. If the auditor determines the amount is not correct, he may adjust FAGI for the purpose of calculating Kansas income tax.

This revenue ruling replaces and supersedes all prior advice, revenue rulings and rulings that have been issued regarding this issue.

Secretary of Revenue

Joan Wagnon

Date Composed: 06/07/2005 Date Modified: 06/07/2005