0411 Publ 3114 (PDF)

Official source: IRS Forms, Instructions & Publications (https://www.irs.gov/pub/irs-pdf/p3114.pdf), retrieved 2026-10-03. U.S. Government work (17 U.S.C. § 105).

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An examination is an inspec

Examples of voluntary agreements include:

• Closing Agreements (Various Form 906

Agreements)

• Tip Reporting Agreements

• Worker Classification Settlement Agreements

tion of an individual’s or an entity’s books and

records. In addition, an examination involves the

questioning of witnesses to determine the

individual’s or entity’s correct tax liability. Another term

for an examination is an audit.

You can get tax information and forms by

A compliance review is a review con Personal Computer:

You can get tax information and forms by

A compliance review is a review con

Personal Computer:

ducted by IRS to ensure that a taxpayer who is

participating in a voluntary agreement is satisfying the

commitments contained within the agreement. Dur

ing the review, the IRS may need to inspect relevant

records and ask specific questions to determine the

voluntary compliance of the taxpayer.

The IRS offers voluntary agreements that contain dif

fering obligations for both parties. Voluntary agree

ments are generally administered by the Business

Operating Division that secures them.

Publication 3114 (Rev. 4-2011) Catalog Number 26034G

Department of the Treasury Internal Revenue Service

www.irs.gov

www.irs.gov

You can also get tax forms by calling:

1-800-TAX-FORM

(1-800-829-3676)

IRS can make compliance checks as

A compliance check is a review conducted

If not, and the business owner acknowledges they

should have, the IRS may ask the owner to file

them voluntarily. If the business owner does not

voluntarily file the forms, the IRS may prepare

substitute returns under Internal Revenue Code

Section 6020(b) or initiate an examination.

• The IRS will not ask to examine any books and

records during a compliance check or ask ques

tions, regarding tax liabilities. This means that the

IRS will not ask business owners why they treat an

expense a certain way or the reason they treat a

worker as an employee or independent contrac

tor. IRS typically asks these types of questions

during an audit or examination to determine

an individual’s or business entity’s correct tax

liability. If, during a compliance check, the IRS

decides an audit or examination is appropri

ate, the IRS will notify the business owner that

it is commencing an examination before asking

questions that relate to tax liability.

often as facts and circumstances warrant. Because

compliance checks are not examinations, the limita

tions on reopening examinations provided by Section

7605(b) do not apply to compliance checks.

by IRS, under Title 26 of the Internal Revenue Code,

to determine whether a business owner (or individual)

is adhering to recordkeeping and information reporting

requirements. It is neither an inspection, under section

7605(b) of the Internal Revenue Code, nor an audit,

under Section 530 of the Revenue Act of 1978.

A compliance check does not directly relate to deter

mining a tax liability for any particular period. The check

is a tool to help educate business owners about their

reporting requirements to help increase voluntary

compliance. At the beginning of a compliance check, the

IRS representative will inform the business owner that

the review is a compliance check and not an audit or

examination.

• A compliance check is a review of informa

tion forms or documents that the IRS requires

business owners (tax customers) to file or main

tain; for example, 940s, 941s, 8027s, W-2s,

1099s, or W-4s. During a compliance check,

the IRS may ask business owners whether they

understand or have questions about the

filing requirements for these forms. The IRS may

also ask the business owners if they filed the

proper forms for any workers to whom they made

payments.

No. A business owner (or individual) may refuse

audits, the business owner does not hold safe

haven protection under section 530 of the Revenue

Act of 1978.

Additionally, a business owner may not rely on an

audit started after December 31, 1996, for safe

haven protection, unless the audit included an

examination of whether the individual involved,

or any individual holding a similar position as the

person involved, should be treated as an employee of

the taxpayer for employment tax purposes.

to participate in a compliance check without penalty.

The IRS has the option of opening a formal investigation,

whether or not the business owner agrees to participate

in a compliance check.