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.
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.
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.
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.
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.
What you describe indicates there may be something criminal that the IRS is considering-even if there is none you have to initially act as if there might be until you know otherwise.
First, absolutely do not discuss anything with the agents. Get representation.
Second, hire the lawyer.
Third, have the lawyer hire the accountant using a Kovel letter.
Fourth, and most important. These two are no longer “friends”. Each is a potential witness against the other. They must not discuss this matter further.
I’ve been audited twice. Once I owed them about $800 and once they owed me about $1000.