§ 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.