What Is Form 11652 for a Schedule C Audit?

Form 11652, “Questionnaire and Supporting Documentation, Form 1040 Schedule C (Profit or Loss from Business),” is an information-gathering tool used by the Internal Revenue Service. It is not a standard tax form that individuals file annually, but a questionnaire sent by the IRS to a taxpayer. The form’s purpose is to collect detailed information and supporting documents to verify the income and expenses reported on a taxpayer’s Schedule C.

When Form 11652 is Used

A taxpayer receives Form 11652 directly from the IRS, typically when their tax return has been selected for an examination or audit. The use of this questionnaire indicates that the IRS has questions about the figures reported on a Schedule C and requires substantiation. Its issuance is a formal step in the audit process.

The form serves as a structured method for the IRS to request the specific records needed to validate a Schedule C. Failure to respond and provide the requested documentation can lead to delays in the examination process. An incomplete or ignored request could result in the IRS making a final determination of tax liability based on the information available to them, which may not be in the taxpayer’s favor.

Information Required to Complete the Form

To complete Form 11652, a taxpayer must gather a comprehensive set of records that support all income and expense figures on their Schedule C. The questionnaire asks for a general description of the business, including the type of work performed, products sold, or services provided. It also requests a copy of any applicable business licenses or permits.

The form requires detailed proof of reported income. Taxpayers must provide copies of any Forms 1099-MISC, 1099-NEC, or 1099-K they received. For income not reported on a Form 1099, the IRS asks for other records, such as:

• Business bank account statements with income deposits highlighted
• Accounting records from software like QuickBooks
• Electronic payment records
• Invoices issued to customers

Substantiating expenses is another part of the questionnaire. The form lists various types of records that can be used to prove business expenses, including paid invoices, receipts, and business bank account statements. Taxpayers will need to provide documentation for all claimed deductions, such as advertising costs, car and truck expenses, and supplies.

Submitting the Completed Form and Next Steps

Once Form 11652 is filled out and all necessary supporting documents have been attached, it must be returned directly to the IRS. The correspondence that accompanied the form will specify the name and address of the IRS agent or office handling the examination, and the completed package must be sent to this specific destination.

After the IRS receives the completed questionnaire and documents, the assigned examiner will review the information. The examiner may accept the documentation as sufficient proof, which could lead to the closure of the audit with no changes. Alternatively, the examiner might have follow-up questions or request additional clarification, leading to further correspondence and a final determination by the IRS.