Posted on 09/03/2024 4:30:52 AM PDT by MtnClimber
When a hurricane is coming, you board up the windows. When the IRS is planning a storm of audits of people who look just like you, you need an audit response plan.
The IRS has been dropping a new press release with an explicit threat to the bank accounts of successful Americans every other month or so. Their messaging sounds increasingly political, and high-income taxpayers would be foolish to ignore what they’re saying: the IRS plans more audits of successful Americans to force them to pay more taxes.
When a hurricane is coming, you board up the windows and stock up on bottled water. When the IRS is planning a storm of audits of people who look just like you, you need an audit response plan.
The IRS and the Biden administration keep repeating they’re targeting “the wealthiest Americans,” with incomes of $400,000 or more, but actual audit data say that right now, 63% of all new audits are focused on taxpayers with less than $200,000 of income. So maybe more than just the “wealthiest Americans” ought to be thinking this audit response planning, too.
So, considering those preparations, the first principle is this: don’t cower in fear. Know your opponent, anticipate their actions, and plan a response. In this situation, the IRS is your opponent. Knowledge about its agents and their process is power for you.
The IRS has a revenue maximization strategy in place — it’s been very public about it — and it wants cowed taxpayers to knuckle under and “pay their fair share.” It wants to “close loopholes” when the fact is, legal loopholes are created in the tax laws, and tax laws are the province solely of the U.S. Congress.
The IRS likes to audit people it thinks it can get serious money from....
(Excerpt) Read more at americanthinker.com ...
All those new IRS agents were not hired to just sit around.
Yup. They are geared to justify their own existence. These treasury positions aren’t bottom rung either.
I got audited and it turned out to be pretty simple for me, in my case I didn’t deduct anything fancy, for instance meals, I only deducted straightforward stuff like tools, vehicle and office portion of house, business phones, advertising, all obvious and with firm receipts and bills.
The audit was probably because my accountant and his firm were arrested and convicted for cheating for their rich clients, offshore deals and such.
The author didn't explain the parameters of "highly compensated." He referenced <$200K but that's pretty broad.
If I may ask, how many years after the return was filed did you get the audit request?
Trump should transfer all 87,000 IRS agents to ICE. Send them to the border.
I don’t remember but it wasn’t years, for me it was no issue since I kept each year in a separate box with everything orderly and easy to read, stapled and paperclipped, so all I had to do was take that box into them.
I did the same for my accountant so that all he had to do was check my figures and make sure they matched each organized stack of receipts and bills and cancelled checks, in return he didn’t charge me much.
The Deep State permitted and even encouraged the destruction of the real military because they couldn't be counted on to defend the Deep State against the citizens.
Ergo...
I was asking because I’ve heard different recommendations, even from accountants, about how far back to keep records.
Currently, I’ve reached the stage of life where I’m fortunate enough to have income that is mostly from investments and SS; and the accounting software is all computerized. There can only be dispute on the deduction side, where I don’t do anything radical or expensive. My business interests closed out a couple of years ago.
Still, I remember an engineer I knew years ago who was going through a divorce and didn’t have a lot of money. He got dragged through multiple audit sessions where he thought the only goal was to get a “W” for the auditor.
The IRS likes to audit people it can get serious money from??
You mean like waitresses tips???
Applicants stated that they were ready to "shoot to kill" American tax-payers.
Maybe they would do the same for the 'newcomers".
IRS = American Gestapo
As a CPA, I handled hundreds of IRS audits over the years. Big businesses, small businesses, individuals, corporations, non-profits, tax fraud cases, all the way through tax court when necessary.
Many of the audits I handled were to fix the screw ups of other CPA’s who didn’t know how to represent people in audits. Several times I had to amend a client’s return after the audit was completed by another CPA just to reopen the case and have a second audit on the same return, where I got the previous audit assessment reversed.
My first and most important advice is to get a tax professional who knows what they are doing. Just because they have the credential does not guarantee they know what they are doing.
Second, do not use your tax preparer to handle the audit. This is for several reasons. Often preparers make mistakes and try to cover them up in the audit. The taxpayer then gets screwed.
I’ve often used preparer mistakes to have penalties removed as it was not the taxpayer’s fault.
Further, with the preparer penalties now being enforced by the IRS, it creates an adversarial relationship between the taxpayer and preparer. This conflict of interest to save their own neck should prohibit them from representing you in the audit.
99% of the audits I handled were on returns NOT prepared by me. I was a liason between the IRS and the state society of CPA’s to resolve problems between CPA’s and the IRS field agents. To use the regional IRS Director’s own words to me, “Occasionally our agents wander off the farm and we need your help to reel them back in.” There are bad agents and they need their wings clipped.
Lastly, do not get emotional about the tax audit. Do not get angry. It is more of a psychological chess game than a confrontation.
You are dealing with a big bureaucracy. Use it against itself. Field agents generally have no idea that appeals agents give away most of their assessment. There is no reason to confront the field agents. Just agree to disagree and maintain a good working relationship.
I taught many programs with the IRS. I was a tax law professor at a major university and taught many professional tax courses for CPA’s and attorneys. The university asked me to teach a class on handling IRS audits, and I refused. The last thing I want to do is educated IRS agents about the strategies used to win.
Years ago I had a IRS field agent business auditor say to me, “I feel like these audits are just teaching people how to get away with cheating.” Contemporaneous documentation is the key to winning. Most tax court losses are due to inadequate documentation.
Boy does this hit home. The IRS has suddenly come after me and my wife, saying we didn’t pay our 2018 taxes. We’ve been going round and round with them for MONTHS. We’ve sent copies of everything, including all the checks they cashed, yet they claim we haven’t paid for that particular year. I’m convinced it’s because we’re conservative. Aaargh.
If they refuse deportation work or go where they are sent, fire them. If they don’t refuse, maybe they will reevaluate who the real enemy is.
Besides, think of all the unpaid taxes owed by illegals!
In addition to documentation matching programs to identify unclaimed income on returns for audit, the IRS runs the data on a return through a differential equation that identifies the probability of there being a major error on a return.
They call this a “Diff Score.” The higher the Diff Score the greater the changes for an audit. Each year the IRS starts with the highest Diff Scores and works their way down the list, based upon time and agents availability.
I’ve had IRS audits revoked from happening, just by having the audit transferred to another IRS Office who was busy working on higher Diff Scores and couldn’t do the audit.
Knowing the top secret algorithm of the differential equation takes years of experience as even the IRS agents are not allowed to know the equation. This was explained to me by top IRS programmers in Washington DC that worked fill time on the equation.
I worked to fine tune the program to eliminate unnecessary audits. For example, if a clergy with 50% of their compensation as non-taxable Housing Allowance and they tithed 10% of total income to the church, that showed 20% of taxable income as a donatation and flagged them for audit.
By tweeking the program to consider non-taxable income and profession, we solved the problem of unnecessary audits.
Thanks for your responses. That was interesting.
Great idea. When are those foreign amnesty and assylum maggots going to start paying taxes on all of the money and other benefits that the Feddies are giving to them in their welcome wagon baskets?
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