42-2070. Prohibited audit techniques
The department shall not use financial status or economic reality examination
techniques to determine the existence of unreported income of any taxpayer, except in the
following circumstances:
1. The director may authorize the use of financial status or economic reality
examination techniques in criminal investigations.
2. The director may accept amended returns due after any federal adjustment
required pursuant to section 43-327 in which the change or correction was determined by
the commissioner of internal revenue or other officer of the United States or other
competent authority using financial status or economic reality techniques.
3. The director may authorize a deficiency assessment pursuant to section 42-1108
if the taxpayer fails to report a change or correction pursuant to section 43-327 in
which the commissioner of internal revenue or other officer of the United States or other
competent authority used financial status or economic reality techniques and the
department receives the change or correction through its exchange agreement with the
internal revenue service.
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