It has come to our attention that the IRS is auditing over 1,000 families who completed their adoption in 2002. These families are being randomly chosen so far as we can tell. We believe that these are 1,000 Intercountry Adoptions and not specific to those from Guatemala.
This is nothing for anyone to get fired up or angry about. In today’s day and age of e-filing where no physical documents are sent to the IRS and yet there is this relatively new $10,000 tax credit, it seems logical to me that the IRS would want to make sure the tax credit is not being abused.
The lesson here is to make sure that you get and save receipts for everything you paid during your adoption. If your agency tries not to give you receipts for everything, then be sure that you save copies of the bank checks and other things to prove that the payments were made.
The key items they are looking for in these audits are proof of age, proof of adoption (in a very detailed manner – Guatemalan documents, translations, and US documents), and receipts and/or canceled checks for all expenses claimed. In addition, they will likely request details on any employer reimbursements. One person being audited suspects that they may be looking to verify when adoption expenses were claimed compared to when the process was final, but that is just a guess but the auditors said they had no idea why so many investigations were being made. The IRS contact phone number that was given is 1-800-477-1291.
Its finally published....
Here is the information about the requirements for IR3 and IR4 adoptions (taking the tax credit). Click here.