Posted on 07/21/2009 7:52:54 PM PDT by ROTB
A friend of mine got a call from the IRS. He is getting audited.
He and another friend that worked for the same company, had the boss hanging out over their shoulder, who browbeat them into taking riskier deductions than perhaps they might have.
Both are getting audited.
My friend is seeking the collective wisdom of the group with regards to audits.
1) total transparency 2) get a lawyer 3) a particular strategery
Thank you FRiends.
Have a tax attorney look things over.
Whenever he meets with anyone from the IRS ask for their business card which they have to give you.
If it says CID “Criminal Investigation Division” at that point surely say nothing and get a lawyer.
Go to your local CPA firm for representation. Doesn’t need to be a large firm, just one that has experience in dealing with the IRS.
Insist on the Tim Geithner or Charlie Rangel treatment.
Depends on what type of money they think he owes. An attorney is going to cost him; if the amount at-issue is small, then it may cost him more to hire an attorney than to just pay them what they think he owes, to go away.
Fake your own death and move to Costa Rica.
If you’re not getting audited every year, you’re paying too much in taxes.
I agree. Depends on how bad the penalty is. However, I would lawyer up with the best damn pit bull ex IRS tax attorney I could find. These people have all the time in the world and all the money to prosecute you. AND THEY WILL. Make no mistake, they love to make examples of honest citizens who make mistakes. Kind of like kicking the victim while they are down and selective law enforcement. Watch your ass.
Great minds think alike. You beat me while I was looking up the map.
If your passport is still valid leave the country immediately. If not get a deep tan and go to the nearest sancuary city.
What kind of audit? Correspondence audit or office audit?
The former usually isn’t a big deal. Just answer in writing and pay whatever needs to be paid.
An office visit is more serious. Get a CPA or an ‘enrolled agent’ (someone who is authorized to speak to the IRS on your behalf) to represent you.
Never volunteer any more information than is requested. Otherwise you open the door to additional investigation.
Lay everything out in the open they ask for. Otherwise you just encourage them to dig deeper.
If they know they did things that were debatable that amount to substantial amounts of money, then they should hire a lawyer to minimize the pain. If the things in question are relatively small, then simply be prepared to pay the bill along with interest and penalties.
If they lied on their return then hire a lawyer and take your medicine.
How much money is involved and what sort of “risky” deductions did they take...the answer is a combination of both questions..
Hmmmm....
In all of my experiences...the IRS doesn’t make phone calls.
They send letters.
Lawyer.
They can use the convaluded tax code to find things that aren’t even there! Get a lawyer that knows his or her way around tax law.
;-)
I got audited in 2008. Get an accountant to go with you, do not meet in your home, but all meetings should be at the accountants office. Any gray areas should be answered with “I’ll get back with an answer”. My tax return was relatively pristine so I did not get an attorney but that might be a good idea if the amounts in question are large.
The auditor is likely to be an ass but my experience only has a sample size of one.
When I was done, the auditor sent me a bill which I paid. Apparently someone audited the auditor because later they sent me a letter with a check refunding about 10% of what I paid.
If you got a CP2000 letter, it compliance letter kicked out by a computer. It usually is very specific and indicates what caused the audit. Unless you _know_ you are right (and have legal advice to back it up), dont challenge it; just pay up.
I’ve had letters AND phone calls. The phone calls were friendly and WHAT’s up?
I didn’t file (for a good reason) and they owed me money.
1. Get a good tax lawyer to review the data.
2. Tell the lawyer the truth, all of it.
3. Take the lawyer’s advice.
4. When talking to the IRS, answer questions honestly and but do NOT volenteer information.
Did they do their own taxes, or have a CPA do them?
If they did them themselves, get a tax lawyer. If not, have the CPA handle it.
I’ve been audited a bunch of times, and only had one (small) penalty in 38 years. Always let the pros do what they do best.
I trusted TurboTax, which missed some investment data. TurboTAx downloads data from investment firms, but in my case the data was incomplete. The IRS letter said I owed $7000 and to respond in three weeks (just before April 15th.) A friend accountant completed a response with the advice to send as little as possible. They didn’t like “little” and affirmed the first notice. Now that it was after June 1st, I hired a good accountant and he completed all the forms, called and faxed them to the IRS. I’m awaiting a response, but will appeal before the 90 days is up if I don’t hear.
I prefer honesty, so I’ll tell em what ever they want to know.
Life is to short to be a slave.Move to another country and find your freedom.
Tell them you want to talk to Obama and want a cabinet or czar position
Yeah that’s a classic CP2000. The TT download missed one of your 1099Bs. The computer got the broker’s 1099B and your was missing, hence the letter kicked out. By default they will try to tax you on the entire amount of the stock sold.
Get the 1099B from your broker and make sure it includes the broker’s Federal ID number and that your SSN. Take the 1099B and circle in red ink the Stock Basis amount. Subtract the basis from the sale price and compute the taxable gain (showing your arithmetic). Also compute the penalty (Turbo Tax should help there) and show all your calculations. Send it in with a check you should be golden.
Remember, the IRS only cares about the money.
Well, I hate being an asshole, but here goes...
Had you lived back in 1776 and the taxman came after you, you would’ve been supported by someone like Sam Adams and the Sons of Liberty. The tax collector would’ve been driven out of the community and you and your family would’ve been safe.
Today, however, there is no such thing as patriots controlling local governments, protecting citizens and tarring and feathering tax collectors.
Nope, you’re on your own, buddy, and no local conservative will help you. In fact, nobody cares about you, so you might as well get on your knees and be fitted for chains.
In fact, your local conservative neighbor may be armed to the teeth with a Glock, an AK-47 and a Mossberg, but it does you no good. He’s too busy watching American Idol and can’t be bothered to attend a local council meeting and hear your troubles.
So, good luck in your misery, we’d help but we’re busy watching American Idol or some other stupid cop show and we’re scared.
Go meet with the IRS, play dumb and ask thousands of questions, whine and cry and tell them about the squirrels that keep running across your desk. They will help you out. LOL
Wow...
Never heard of them making phone calls...
Time to disconnect the landline....
The friend should tell them it’s none of their business how much he pays in taxes.
And then he should challenge one of their agents to a duel with broadswords.
No sweat use turbo tax timmy’s defense it was the computers fault...good enough for the Secretary of the Treasury!
Tax attorney. People who try to cooperate on their own and do the ‘total transparency’ thing say too much and give too much info the govt has no need for, and they can end up making things a LOT worse.
If you understand that you never say anything more than very short answers to police, it’s the same situation. If things get hairy, you stop talking and get your lawyer. The lawyer will tell you what you should and shouldn’t answer, and how you should answer. Brief to the point. No more than necessary. Otherwise they will go on a fishing expedition on your @ss.
Unless we did something wrong, we were audited in the 1990s, and the IRS agent didn’t give us a choice. He just showed up at our house whenever he wished. He even showed up on Christmas Eve. He was mean, arrogant, and told my husband that the IRS waS a big agency and could “squash us like a bug”. I think part of the bad treatment we got was because we were pro-life activists, and that may have had something to do with it.
Yes, excellent point. CID agents are assigned only cases where they believe criminal activity has gone on. A regular IRS agent would be on cases where they do not believe fraud/crimes exist, but if it is uncovered that it appears to be, it woudl be turned over to CID.
In either case I’d still get a tax attorney. One that deals with the IRS.
Ah yea IRS audit. The only place in US legal structure that not only do they ask you to testify against yourself, but they require it.
Get a lawyer and have him do the talking.
As an alternative you can use an “enrolled agent” as an alternative to an attorney. These are usually retired IRS agents who know the ins and outs, and are not as expensive.
Do not show up alone.
The IRS generally doesn’t go after you criminally unless you do something to piss them off (like join an anti-tax group) or you are a celebrity and they want to make an example out of you (like Richard Hatch).
If you refuse to pay they will put liens on your property or paycheck. Generally the IRS just wants the money. They can’t get it from you if you are in jail.
If they used a CPA to do their taxes, they are home more or less free. A tax preparer who signs off on the 1040, as does the person (or couple) being audited, can and should be the only person to attend the audit. The preparer should bring in only information pertinent to the tax year in question, as well as a specific power of attorney for that year. The person (or couple) most definitely should NOT attend the audit, letting the tax preparer handle the dirty work.
If they were dumb enough to prepare their own returns, they will have to attend and handle the details themselves (which is why it's a darn good idea to have a professional CPA do your taxes, the fee is deductible next year and having them represent you by proxy in an audit situation relieves you of a lot of stress and potential expense). As such you should not bring in every piece of paper and returns other then the year in question. You should also refrain from babbling away about "background information", rather keep the answers short and on topic with a minimum of nervous chatter.
Keep the thought in mind that you are going to wind up paying something and try not to make it worse then what it has to be by arguing with the examiner. You will also probably get nicked for interest as well. You can generally arrange to spread the additional payments over an extended period at the cost of more interest so you won't have to come up with a large chunk immediately.
Good luck and if you aren't doing it yet go to a CPA from here on out as once you've been audited, they will be looking at you for probably the next two tax years. If they can't find anything after three audits they are not allowed to keep digging.
Regards,
GtG
PS I got audited three years running and they never found anything out of line, that's why you go to a pro. My tax guy is a retired IRS auditor and he's worth a lot more then what he charges. H&R Block doesn't even come close, find someone that actually knows what he (or she) is doing.
Whatever they are shown gives them license to investigate further.
For example, if they ask for a utility bill from a certain month and it can’t be found, and instead a bank statement is shown that lists the utility bill was paid, then they have license to go through all of your bank records. From your bank records if they suspect income was received that wasn’t reported then they add that as a charge or as a point they are investigating. So one thing can lead to another.
So whatever they are shown needs to stop them from looking further.
Same with credit card purchases and payments. If a bank card is used say at Home Depot and the last 4 digits of the card are printed on the receipt, that gives them license to audit the credit card or bank records.
Again one thing leads to another.
If your friends don’t have a receipt, then tell the IRS a receipt can’t be found. Then they will have to issue a summons for the record to the company that sold the goods or services.
If they take a long time, that is a good thing. Then your friends can contact the revenue officer (not the auditor) and offer a compromise. In other words negotiate a payment with them and be done with it.
Another thing is they are only allowed to audit the past three years. So if they auditing 2008, they can ask for 2006 and 2007. Do not show them any records or filings from 2005 and before, because that gives them license to audit further back.
As others have pointed out, if it is a criminal investigation then one would not likely know it is, but there are no restrictions on what can be looked at in a criminal case (at least I don’t think there are restrictions).
One will not get any sympathy points from them by appearing cooperative. They don’t care but they can escalate the investigation/audit if one appears uncooperative. So the kicker is to appear to be compliant but at the sametime not giving them license to continue into all other kinds of areas that they were not originally targeting.
Tax accountant experienced in dealing with IRS. Let them handle the audit. You don’t need an attorney....yet.
Tell him to watch this youtube video. There is a part where the guy talks about a former student wanting to be questioned by the IRS. I strongly suggest your friend follow the advice given.
http://www.youtube.com/watch?v=i8z7NC5sgik&feature=PlayList&p=4B62CC6AFE12BBE7&index=0&playnext=1
Make a deal: Turn in your boss. He can’t retaliate from prison.
How long have been working for the IRS?
I messed with them a few years ago and got stomped bad. Was self employed, didn’t file a tax return for a few years, lost my contract and decided to live off of my “tax fund” instead of applying for social services.
There were quite patient with me in the beginning, but when they realized that I didn’t feel that I owed them the money, the amount I owed doubled quickly due to fines and penalties. They started filing liens on my property over one missed (thier fault, they didn’t record it properly) payment. Took me 5 years to get them off my back. I will honestly never screw with them again.
#2
Don’t go with your accountant to an audit. IRS has games to draw you in to small talk.
I don't know what that means exactly, but "lawyer up" with an experienced attorney would be my advice, followed by hiring an experienced tax accountant to meticulously go through the returns so that he (your friend) can know where he went wrong and how much he may owe.
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