IRS Audit..!

[N O]

What a time to get this piece of mail. Any advice on how to deal with an IRS audit? Now I'll have to pay for this AND come up with the money for 07 soon.

Anyone been through a field audit? Everything I read says do it at their office. They want to come to my home based office.. My business broke

100k in '06 and apparently that substantially raises your odds of being audited..

My nerves are shot. I don't keep very good records. And the more I've been researching, the more I'm finding things I could have been deducting and things I deducted incorrectly.

I just don't see how the same government that awards no bid contracts to Chaney's 'former' company can ask it's citizenry to be enthusiastic about paying taxes. ...

We all know how corrupt the system is including the IRS.

"Who are you going to believe, me or your lying eyes?" -Groucho Marx

[Cheri]

Anyone been through a field audit? Everything I read says do it at their office. They want to come to my home based office.. My business broke

100k in '06 and apparently that substantially raises your odds of being audited..

My nerves are shot. I don't keep very good records. And the more I've been researching, the more I'm finding things I could have been deducting and things I deducted incorrectly.

I just don't see how the same government that awards no bid contracts to Chaney's 'former' company can ask it's citizenry to be enthusiastic about paying taxes. ...

We all know how corrupt the system is including the IRS.

"Who are you going to believe, me or your lying eyes?" -Groucho Marx

Personally, I wouldn't go to their office. They get paid for their time and travel to come to yours, you don't. I really don't understand "I don't keep good records." If you are based from home, good records are essential. Surely, you have a tax man or accountant to tell you what deductions are allowed etc.? At any rate, I feel for you. Good luck with it.

Cheri

[Kurt Ullman]

If you had a CPA or Enrolled Agent do your taxes let them know. If you didn't, then I would probably talk to one or the other to see what advice they can still give you.

[joe]

How do you break 100k without good record keeping? Forget researching, use your, (or get a) CPA but quick. Oh, and regarding the no bid contracts: Never expect anything logical from the gub'mint.

gl with the audit.

jc

[Dan Espen]

Yeah, funny how the word "patriot" is NEVER applied to those of us that don't mind paying taxes.

Ok, there may be no "us", just me.

Well, ok "enthusiastic" may be overstating it, you win.

Based on what you wrote above, I think you may need a lawyer.

[willshak]

Yeah, why aren't they out catching real criminals? Oh! Never mind! That's what is said to the cops when one is caught speeding.

[Malcolm Hoar]

Sounds like you took a home-office deduction. Bad idea. As my CPA put it... "they get a hard on the second they see a home office deduction".

Well, unless you home office is a completely separate room with no "personal" stuff in it at all, I suggest you meet at their offices, if you can ;-) You'll also have some time if they ask for a document that you forgot to bring with you.

Otherwise, you may have to reorganize your home a little to comply with the applicable rules on home offices.

Consider consulting with a CPA or tax consultant.

Find all of the documents that you can which support the income and expenses you have declared on your '06 return. If your documents support the first 5 things they ask about, it will buy you a lot of credibility on the remainder. They might even terminate the audit at that point.

[Edwin Pawlowski]

The audit should take place at your accountant's office. Don't have one? Get one. If you are honest and made a couple of simple errors, no big deal. File an amended return and pay a small penalty. If you are attempting out and out fraud, it is a big deal.

Our tax laws suck, big time. Good accountants don't cost you anything, they save you money. Get one. No different that paying a plumber or auto mechanic, they specialize.

[DerbyDad03]

re: Now I'll have to pay for this

So you've already assumed you've lost? Hmmm...did we do something wrong and finally get caught?

re: AND come up with the money for 07 soon.

So you haven't been paying your 07 taxes all along?

re: I don't keep very good records.

Snicker snicker...Good Luck!

re: We all know how corrupt the system is

What system is that?

re: including the IRS.

Make sure you bring that up at your meeting. That oughta get you some good-will points.

[HeyBub]

Many will tell you to get the services of a CPA, enrolled agent, or attorney.

I vote for TAX attorney. Find their national organization and contact a local member.

The advantage for using an attorney is that whatever you tell them is priviliged.

In our case, I send a backup of our Quickbooks file to the attorney and back comes our corporate returns (federal and state) signed by someone the IRS doesn't really want to screw with.

[N O]

There are hundreds of millions of dollars unaccounted for in Iraq. And the IRS is looking for chump change on my street..?

If you buy stamps for your business and you use one for a piece of personal mail, you are in violation of IRS rules... So, who hasn't run afoul of IRS rules .. Yea. I have a home office. But it is legit and have had one for over a decade.

And if you're busy making good money, you often don't have time to keep good records...uh ...that is until you get hit over the head like this and realize it's cheaper to keep 'em... I think I'm getting a lawyer. Thanks for all the supportive comments...

"Who are you going to believe, me or your lying eyes?" -Groucho Marx

[Dave Bugg]

Not a tax or IRS problem

It sounds like they're looking for tax irregularities.

Actually, you are allowed to use business supplies for personal use as long as you deduct the portion used for personal expenses from the business expenses on schedule K.

Purposefully or accidentally?

Then you should have no problem meeting the IRS definition of legitimate use. I haven't had a problem doing the same.

Baloney. I make exceptionally good money working 12 to 16 hour days and I keep great records.

Organized records and accounting books are a real key to the success of any business. Even if the IRS wasn't around, I'd be doing it anyway.

At this point, it would be a great idea.

[gfretwell]

Gather everything you have and anything you think will help. You have the right to remain silent so I wouldn't "find" anything that hurts. The last time I got audited I ended up getting $1600 from them because I did the due dilligence before the audit that I should have done before the return in collecting and collating all of my documents. The agent pointed out to me things I could deduct (more accusing than helping) but once we decided they were valid I made money on the deal. Some shortcuts I took to make my return simpler actually cost me money. If you are reasonable they will be ... at least my guy was.

[Dick Adams]

The place to have asked this question is the tax newsgroup, misc.taxes.moderated.

The best answer I can give you is "NEVER attend an IRS audit unless there is an order requiring your attendance. Give a CPA, an EA (enrolled agent), or a Tax Attorney your power of attotney (there is a specific form for that) and the IRS is not allowed to deal with you directly."

Better put - don't get into a tiger cage unless you know how to fight off a tiger.

Dick

-- Richard D. Adams, CPA (retired) Moderator - misc.taxes.moderated

[HeyBub]

You can't build a house without making sawdust. Besides, it's not the Internal EXPENDITURE Service that has questions of you.

No, you are not. IRS regulations are governed, in part, by the 'de minimus' rule.

"Legit" is in the eye of the beholder. It may not be according to IRS regulations.

You might just go ahead and let the IRS figure your tax. After all the upheaval, you may get a "Notice of Deficiency" of only $38.42.

[Cheri]

Last week when I had my taxes done, I have a home office too, the CPA said that new for this year, most of the records and worksheets he keeps on file are privileged. He did say, if the IRS audits me and I decide to handle it on my own, without contacting him, all bets are off, and all of his records are fair game too. Whatever that means. :-)

Cheri

[Cheri]

The criteria here in CA where I am, is no personal stuff, and no clothes closet, so it can't be construed as a bedroom or family room etc., you can store files and things, but no clothes.If he goes there, he should be prepared to run back and forth at least fifty times to get the documents he didn't think about. I'd sooner trap them in my home, and chain smoke. JK, I don't smoke in my home.;-)

Cheri

[Malcolm Hoar]

That's a keeper! I shall remember that one, for ever!

[Red]

Exactly the reason I always file a hard copy return instead of electronically. They're getting paid to work so why make their work easier for them. And the old argument of getting your refund faster is nonsense also - they've had your money for almost a year anyway so what does waiting a few more weeks matter?

Red (If quitters never win, and winners never quit, what fool came up with, "Quit while you're ahead?")

[Dave Bugg]

It doesn't matter *where* one resides; the IRS rules for home office deduction are the same wherever one lives.

State taxes are a different matter; since I live in Washington State where there is no state income tax, I have no idea if home office deductions would even apply on a state return.