Printable View
F'n Govt ruined my week already !! I'm self-employed and I just got a letter last week that my 2003 federal return has been chosen for examination. Has anyone been thru this BS with the IRS ? Any suggestions..or should I get an attorney ? Maybe move to Mexico ? :cool:
Yes, I have.. The tax preparer I was using got busted by the Feds for fraud and audited EVERY customer. What we found out after the fact was that this person was not doing returns correctly. This person would charge based on the ammount of return you got back (which I found out after the fact was illegal) S it was in is best interest to keep the returns as high as possible.
Long story short I have been audited for 4 years and from what I have been told is they will continue to audit me for another 3 years. Once you go on the list it is hard to get off of it.
I finally hired a lawyer after just writing checks and things are starting to turn for the better. but be prepared to pay if you dont have EVERYTHING on the up and up.
GOOD LUCK
Yeah. It's no big deal if your paperwork is in order and your tax return is truthful. Otherwise........your in deep dodo. :hammerhea
Yes, but not for the reasons Riverbound did, mine was more routine. As I used a CPA, they handled it and it was a no brainer. However, if you ever get audited by our state Franchise Board, that can be real trouble. As you probably know, those Resale Cards are a bitch. Don't ever screw with them. Good look with the Feds...
I do know that the IRS added 800 people about 1.5 years ago whose purpose was to audit only. All of our chances were increased. Sorry to hear about the hassle.
I went through one about 10 years ago...It was no big deal!!! Like IOM said if your paperwork is in order...it is easy!!!! :D
RNG
Well my letter says they are examining (3) items on my return: Car/Truck Expenses...Subcontractors...and Gross Receipts. My CPA is good knows her stuff, but I guess they wanna see every single receipt, right ?? Maybe I should just make it easy and get an attorney that specializes in this crap...or get the checkbook ready ?? RB...who did you use, and is he any good ?
Yeah. It's no big deal if your paperwork is in order and your tax return is truthful. Otherwise........your in deep dodo. :hammerhea
My return was truthful, but I got screwed.
Having the backup, and having them accept the backup, are two different things.
If your records are in order it will not be a big deal. If they're not or you are stretching what is legitimate for deductions they can make it a huge deal and run you ragged. A good CPA helps to deal with the auditor rather than you.
Yes they will want to see everything. Give them what they ask for and nothing additional. If you have nothing sketchy as far as what you've claimed you have little to worry about and IMO you won't need an attorney involved (more money). On the other hand if your stuff is marginal I'd consult with your CPA first then possibly an attorney depending on what she says.
I wouldn't hire an attorney until after the audit, and you've done any necessary appeals. They are great about letting you talk to the next supervisor up the line. If you are in doubt AFTER your CPA does his/her thing and they still want a serious amount of money, get a TAX attorney. Normally these things take a lot of time so don't get in a hurry.
I would NEVER go to an audit. Send your CPA. Hopefully you used one for your taxes.
RB...who did you use, and is he any good ?
A retired friend of the family. He used to be an auditer and then went into tax law. he did this as a favor to me. He was good but I am still paying out the arse. My CPA was a criminal (found out after the fact) and because of this I have to suffer. You can get extensions and that is the recomendation I recieved was to extend it as long as possible then they will actually close the audit. once the audit is closed tell them you want to settle it and they will have to reopen it by then they will be anxious to settle. Take as much time as you can with everything. It took me almost 3 years to get mine taken care of. If your CPA is good he/she should know this already.
Yes... It was for alot of money. I won.
Always use a good CPA and keep good records. Trust me you will sleep better. :D
Or put all your records in the barn and let the mice and birds shit all over them. When the auditor asks for them just point and say all yours
Or put all your records in the barn and let the mice and birds shit all over them. When the auditor asks for them just point and say all yours
that will just pis them off
you need to have every receipt in order for each category
if you don't have a receipt have whatever proof you have the its legit
if you have every thing they need ready for them you will be out of there fast
My return was truthful, but I got screwed.
Having the backup, and having them accept the backup, are two different things.
That is the truth having them accept. I had all my paper work in order and then it was I don't know if I will accept this WTF!
But I will tell you sure did learn how to keep all my paper work in order real good. It sure was funny as if I were off a couple pennys on the total they would get real weird. In the end paid couple hundred on use of the truck. If you are legal no big worry just fight for your rights.
Jeff,
Don't sweat it if you're CPA did the return. Just dig out all the tax info and give it to the CPA. Since they prepare the return they are technically liable for most mistakes, errors or ommisions. You are responsible for false information however, so as a caviat keep all your records as proof.
We are going through an audit now, and the IRS does not hire the best of the best out of school. The auditors usually are fresh from college and are using a prepared checklist of items they want to look at. Usually because they really don't know what they are looking for. As long as your numbers claimed add up to the numbers shown on your paperwork, they'll leave you alone. It could be over with in a matter of a couple of hours. If you get a real dingwa, they may want to procede further, make sure your CPA is knowledgeable and knows how far the auditor can take the exam. If they go too far you can call BS and ask thier supervisor to "show cause", in most cases they will have to leave you alone if they can't prove any wrong doing.
Remember also that if your CPA can, it's best to have the Auditor meet the CPA at thier office instead of yours. Keeps you at arms length.
Good luck and don't sweat it.
Scream.
That is the truth having them accept. I had all my paper work in order and then it was I don't know if I will accept this WTF!
But I will tell you sure did learn how to keep all my paper work in order real good. It sure was funny as if I were off a couple pennys on the total they would get real weird. In the end paid couple hundred on use of the truck. If you are legal no big worry just fight for your rights.
What really pissed me off is that they picked apart rediculous things like my mileage log. They said that "I did not prove that the customers I claimed I drove to were actually my customers".
I mean, was I supposed to have a notorized letter from every buyer I drove to in 2001 saying that I drove there on that day (over two years ago)? :mad:
Just because you have the backup, doesn't mean they will accept it.
they always examine cars/trucks... They are looking for dual useage amounts (i.e. allocate the portion that is personal and business) You are not allowed to write off personal usage of a vehicle.... so you had another vehicle available to you after hours, RIGHT! :notam:
Subcontractors... they want to make sure those contractors are not in fact statutory employees (this could be a time bomb) read up on this one so you get your stories straight (i.e. tell those guys you weren't the boss). Also make sure your 1099M's were filed. If a sub is an employee, you could owe payroll taxes on them.
Gross receipts... they are looking for understatement... i.e. "hidden income" this is hard to prove if there is no paper trail so just keep you mouth shut. If nobody saw nothing then don't worry about it.
Well my letter says they are examining (3) items on my return: Car/Truck Expenses...Subcontractors...and Gross Receipts. My CPA is good knows her stuff, but I guess they wanna see every single receipt, right ?? Maybe I should just make it easy and get an attorney that specializes in this crap...or get the checkbook ready ?? RB...who did you use, and is he any good ?
BTW Scream is correct... not the sharpest knives in the tool shed.
Yup, start crunching numbers on the subcontractors if you didn't 1099 them and might now owe back taxes. Remember, payroll taxes are "trust fund" taxes and if you didn't pay them, they view it as stealing (not cheating, under reporting or mistakes, but stealing). Get your ducks in a row on your subs - maybe make amends to any of them you might have fallen out with.
Remember, there's always tax court when all else fails.
A lot of good advise here... Bottom line is that as long as the information you provided your CPA was correct and was filed it properly, there should be no problem with your audit.
Many moons ago my father was a fraud examiner/ prof. witness CPA type with the IRS. He says he always knew of potential holes were in a case that the defendant could have won, but never lost a case(so I think). He's in public practice now doing typical CPA stuff including fraud stuff and business valuations...
If you for some reason you don' tthink your accountant is up to par and would like someone else to speak to, I'll be glad to foward his number to you...
not just that.. we pay 15% payroll tax on employees but no payroll tax on subs.....
so if the sub doesn't pay their taxes they get all irrate and want to collect the payroll tax from someone even if that someone doesn't legally owe it.
So if an IC should have been classified as an employee then someone should have collected and paid payroll taxes on that employee.
Its all kind of grey area and facts and circumstances (i.e. IC vs. employee) so make sure all the stories are the same and you won't have a problem.
so if the sub doesn't pay their taxes they get all irrate and want to collect the payroll tax from someone even if that someone doesn't legally owe it.
so make sure all the stories are the same and you won't have a problem.
If he uses subs, I can totally see this happening.....
ROZ <---- sub
Or put all your records in the barn and let the mice and birds shit all over them. When the auditor asks for them just point and say all yours
thats what i'm talking about