It wouldn’t surprise me if they try that! A friend of mine got stung here in WA State by the State Department of Revenue. The reclassified his B&O classification, increasing his tax liability over the last 5 years by $40,000.
Note that originally the DOR told him to classify as a manufacturer (0.454% tax rate), and did so in writing. No, 5 years later (the statute of limitations - how convenient!) they audit and determined he should have been an engineering services provider (he designed, built, and sold his own product) since “that is where the value was added” and coincidentally his tax rate was now 1.5% and he was liable for the back taxes.
The revenue agent offered him a 50% off deal - in writing - if he agreed to the balance. Knowing it would cost more than $20,000 to fight, he agreed and paid.
Forty five days later the State hit him for the remaining $20,000 and another month of interest. Their reasoning? The revenue agent did not have the authority to make the offer in the first place, and thus the agreement was null and void.
Oh, but since he signed the agreement, he admitted his error so he lost his legal recourse to fight the change in status and now must pay it all.
He’s still in court over that one...
I don’t trust ANY revenue officers - Federal, State, local. They will all use any and all means (including illegal actions, lying, fraud, fabrication) to get your money. Because they only move up if they collect - there is no penalty for not collecting or harassing taxpayers, just a slower ascent up the hill of Government.
I was thinking more along the lines of identity theft. Yes, I witness a huge difference between clients dealing with auditors by themselves or with representation and without representation they often get abused.
My most recent case was a single grandmother raising her grandson on a budget that was hundreds short each month and she owed taxes from 9 years ago. The agent threaten her and made demands for immediate information or he would garnish her pay. I took over, had them forbear for 1 month and resolved it by getting them to realize she was uncollectible. The notes the agent made regarding his threats to the taxpayer was like reading Clinton testimony.