Or, has anyone you know? I can’t think of a single person I know who’s actually been audited, though the threat is always there. Looming. Like some financial boogeyman or something. I’ve made some deductions which were disallowed by the IRS, and I simply received a letter from them saying that an “adjustment” would be made to accomodate the disallowed deduction, and if I wanted to fight it I could. That’s the extent of it. I also failed to file in 1995, and although I paid some significant penalties when I finally filed and paid taxes I owed, it’s not like they “came after me”.
Tax time is again right around the corner for us here in the States, and it’s got me wondering if IRS Audits are reserved for big hitters like corporations and are otherwise nothing but a scary bed-time story our tax accountants tell us to keep us frightened and paying them to do our taxes.
So how 'bout it, fellow Dopers? Ever been audited? Know anyone who has?
I was, back in the '70s when I was making $6.50/hr, part time. Nothing came of it, but I was really surprised they bothered with me once they saw who they were scrutinizing. It was funny, as it was the first time I ever had anyone else do my taxes for me. Maybe it was less about me and more about him.
It was not as bad as I expected, possibly because the accountant and I spent some hours ahead of time getting all my documentation together.
The audit itself was going thru our returns line by line and documenting everything. There was actually a mistake on the IRS’ part. I went in owing the government something like $13K; I came out with them owing me a couple hundred. And the agent was not an asshole about anything - we just came up on the computer flagged for audit, and we have all our records for the past dozen years, so we just showed up with two big boxes of paper and were organized about it.
I was audited a couple years ago. My husband and I were already divorced, but we were jointly audited for the last year that we were married. It was our mistake (my idiot husband did the taxes and “forgot” to claim some 401k money, and my idiot self didn’t check behind him) so we didn’t fight it. The IRS said they didn’t care that we were divorced and they didn’t care who paid, that whoever filed their taxes first (it was almost at the end of the year when this happened) would have the amount automatically deducted from their refund and they would not even try to split it.
It wasn’t the worst thing in the world, but that may be because it wasn’t an error on the IRS’s part that I had to fight. I rightfully owed the money. The only snag was because of the divorce, but my ex and I settled that between ourselves.
I was audited last year, and had all of the anxiety normally associated with it.
I had made a withdrawal on a 401(k) about 5 years ago. Oddly enough, I had kept my request on file, and it turns out that the 401(k) administrator had incorrectly processed my requested LOAN, and hadprocessed as a withdrawal, therefore putting me in a taxable situation.
After everything, it wasn’t that bad. I owed an additional amount of money, and I still have gripes registered with the administrator.
My dad got audited several years ago. Basically the tax codes said he could claim some particular deductions in one of two ways, one of which saved him a lot more money so he went with that choice.
The IRS said “You can’t do it that way” and came after him. He sat down with his tax attorney who agreed with his position but the IRS won in the end. I believe that they then changed the law the next year so the better choice was no longer available.
My Bro represents dudes in Audit (not so much anymore, he mostly does small non-profits). But anyway, the IRS Agents/Auditors are generally OK dudes, just bureaucrats waiting for their 30 years. Treat them with respect, get your ducks in a row, and it won’t be too bad. Free advice from my Bro- if you don’t like the “deficiency” they propose, go to Appeals- the IRS calls it “the Santa Clause Division”. OTOH, consider how much they want you to pay and how much it will cost in time and fees to fight it- never fight “for the principal of it”. It’s only money. Do hire a CPA or EA to represent you.
Most likely Audit targets: Sch C’s- especially those with losses, EITC, and casualty losses.
Many dudes get a notice from the IRS about a missing W-2 or something or a math error and think they have been audited. No.
If you kept doing whatever you were doing after the first audit, it’d seem to be your fault. No way it can be “their fault” for *10 years * of audits- the Statute of Limitations is normally 3 years, unless they can prove Fraud.
During 20 years of being a Enrolled Tax preparer, my Bro sez he only ran into one bad IRS agent: a Revenue Officer- that’s a repo-man. Hardly “gestapo”.
I was re-assessed by Revenue Canada. it was no big deal, my accountant handled it and they didn’t find anything. Yay.
The one good thing is usually if you are re-assessed and they find nothing wrong you are pretty good for a few years. If they find anything, you will be hit again the next year.
Twice.
Once in the seventies for entertainment expenses and mileage. Turned in my calendar for that year to my CPA and got the letter back no change necessary.
Then in the 80’s I got hit again for employee business expenses (My tools and other stuff) I turned in all my receipts to the CPA. he went down and apparently the auditor was an asshole. he demanded more documentation. I photographed all of my tools. I sent my CPA down with one single wrench and a price list that showed that that wrench along cost $85.00. No dice, the guy denied every deduction except my home mortgage interest. We appealed, and got everything back except my office in home deduction. (I was claiming the garage for my side jobs) the appeals officer told my CPA, look you know you can’t have this, and I know it. You can take it to tax court, but it is only $300. MY CPA agreed and I paid up. No audits since.
We are in the process right now, and we already know it’s the IRS’s mistake. It will take months for them to figure that out and close the file.
Has to do with a trust fund disbursement where the IRS read their own damn form incorrectly!
When we got the letter, we forwarded it to our CPA, who put together the response (paperwork showing that the IRS has it’s head up it’s own ass) and had us sign and send it. No big deal, really.
Rick, it is my understanding that claiming a home office deduction is the quickest way to get audited.
Lots of people try and fake it, but it’s tough- I think the space and equipment can be used solely for the business. One single personal item on the computer, or using the tools on your own car, etc, and you’re out of luck.
OTOH, consider how much they want you to pay and how much it will cost in time and fees to fight it- never fight “for the principal of it”. It’s only money. Do hire a CPA or EA to represent you.