Revenue Agent's Report - RAR
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Definition of 'Revenue Agent's Report - RAR'
A detailed document describing an IRS examiner's audit findings and stating the amount of deficiency or refund the agent found the taxpayer to owe or be owed. Taxpayers have the right to disagree with a revenue agent's report and can choose to fight the agent's findings through a formal protest to the IRS Appeals Division, by appealing to the U.S. Tax Court or by paying the new assessment but then suing for a refund.
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Investopedia explains 'Revenue Agent's Report - RAR'
The IRS notifies state tax authorities when it issues an RAR. State laws require that if the federal government changes a taxpayer's liability, the taxpayer must file an amended state return. States have this requirement because state tax liability is based on federal tax liability. If a taxpayer is deemed to owe more federal tax than what was paid, the taxpayer likely owes more to the state as well. This statute applies whether the taxpayer is an individual or a business. If the taxpayer pays tax in multiple states, the compliance process can be quite burdensome.
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