That’s The IRS’s decision, and they take on a case-by-case basis. They don’t just arrest you , rather ask you to justify things first. They’re also pretty reasonable about it: a couple of lost receipts won’t make a difference.
A major factor is the amount of money involved. If it’s $10, it’s not worth their effort. If it’s $10,000, it is.
Each year, despite the shopworn promises that they are going to make tax forms simpler, the length of our 1040 and attachments increases. Last year it was 112 pages. This year I found out there’s a whole new form we need to add, so it will break 120 pages.
We do them ourselves, and we are scrupulously honest. If anything we always err on the side of losing money. Don’t have a clear receipt for a deduction? Fuck it, we don’t claim it. My time does have a serious value, and so does my stress. When I click to send that form off there is no fear that if I’m audited I will be having to “um” and “err” my way through an audit in someone’s office downtown.
We’ve been audited twice, and each time passed with flying colors. Once they gave us money back and interest. Both times the only worry I had was the IRS complete lack of communication. “We are freezing your refund. Why, we cannot say. How long, we do not know. What the next steps are, ah, yes, that is a quandary, is it not?” Seriously, their letters and phone droids were about that bad. When after 4 months I finally could speak to a human about releasing a refund, she said in effect “WTF? Why was this even flagged? What a waste a time.” :rolleyes: