Comments on: 7 Audit Lessons (or How I Learned to Stop Worrying and Love the IRS)

By: Christa

Christa — Wed, 02 Dec 2009 20:05:39 +0000

This is a great post, thank you so much.

It raises a question for me, though. On our 2006 returns our accountant made a deduction error (a big one). We filed in Oct 2007 and I didn’t notice the mistake until I was getting our papers together for the next year’s taxes in March of ‘08. I had him fix the error and we submitted amended returns, paid what we owed, and were billed later by the IRS for fees and penalties.

My question is this: if this amendment was filed in March of ‘08, does the amount of time the IRS has to audit tax year ‘06 start with the original filing or the amended filing? Also, since they billed us for fees and penalties, would that be a red flag for an audit?

By: Roth & Company, P.C.

Roth & Company, P.C. — Fri, 27 Nov 2009 15:46:22 +0000

TaxGrrrl survives audit!…

The TaxGrrrl, an excellent tax blogger, has been audited, and lives to tell the tale. She has some great advice,……

By: Joe

Joe — Thu, 26 Nov 2009 12:50:54 +0000

As long as you “agree to disagree”, dealing with the IRS is no big deal. They have a job to do. The tax law sometimes makes less sense to them as it does you. Remember, CONGRESS makes tax law, not the IRS. Yelling at the IRS about tax law is like yelling at the cop giving you a speeding ticket. The cop didn’t make the law, he just enforces it. Same goes for the IRS. If you do what this article says to do, you’ll be ok.

By: JBruce

JBruce — Wed, 25 Nov 2009 21:32:41 +0000

Absolutely right. I prepare my own returns. I’ve been audited four times, and nothing evil ever happened. Most important: have a paper trail for everything in your return and never try anything funny. 25 years ago I shared a consulting project with a colleague. When we got paid he told me that he never reported any of his consulting income (which was a lot more than mine) and asked me not to report my fee so the IRS wouldn’t be tipped off. I said sorry, I didn’t want to take that chance. (I don’t know if he ever got caught.)
My first audit everything was fine and the agent didn’t asrue with me about anything. Maybe asked me for some more details, but nothing else. But I noticed a deduction I’d forgotten to take, so they sent me more money!
My second one they argued about one deduction and I ended up sending them a couple hundred bucks. But on later reflection I think I should have asked to see the supervisor about it (you can do that, all the way up the line); I still think I was right.
The third audit was a wash; I ended up not owing anything. The next year they sent an audit notice for basically the same things; I called and told them the previous year they audited me for the same stuff and I didn’t owe anything, so they cancelled the audit appointment.
In all my audits, whenever he asked for proof of anything I reached into my briefcase and pulled out the relevant paper trail. After a few of these he just said everything was fine; I guess he thought this guy has all his paperwork and he’s backed up everything I’ve asked so far, so it probably will be a waste of time to go on any longer.
That’s the moral. Don’t be afraid to deduct anything you think is legit. Don’t be afraid to “flag” anything in your return so long as you think it’s OK and you can back it up.
And the IRS agents never presented an “aggressive” demeanor. They’re just guys doing their job, and maybe it’s a nice relief to them when someone comes in who has everything ready, knows what he’s talking about, answers every question as best he can and seems to be trying to make their jobs easier, more efficient, and quicker.