How to Avoid Tax Audit

[easysurfer]

Here's how to avoid a tax audit, according to the following article:

Keep IRS auditors away: earn less than $200,000 - Yahoo! News

 

[Purron]

I worked for the IRS many years ago. Perhaps the darkest three years of my life. I beat it out of there once I realized how depressing and miserable a place it was. Yeah, what was I thinking? Well at least I got out as quickly as possible.

One thing I did learn is if you do get audited, hire a professional. I'm not talking about the "paper audits" where they ask for clarification of a line item or additional paperwork by mail. I talking about a full fledged audit where you go in with a box full of paperwork and face an examiner who can decide to expand your case to cover multiple tax years and multiple issues.

I can't tell you how many "do it yourself" types came in to handle the audit themselves and messed it up big time.

 

[youbet]

Based on the "Chicago politics" I grew up with, isn't the best way to avoid an audit or other potential gov't retribution to be an outspoken supporter of the party in power? And not to have any record of support of the opposition in your file? The numbers on your 1040 are only of interest if your name is on "the list!"

 

[easysurfer]

I worked for the IRS many years ago. Perhaps the darkest three years of my life. I beat it out of there once I realized how depressing and miserable a place it was. Yeah, what was I thinking? Well at least I got out as quickly as possible.

One thing I did learn is if you do get audited, hire a professional. I'm not talking about the "paper audits" where they ask for clarification of a line item or additional paperwork by mail. I talking about a full fledged audit where you go in with a box full of paperwork and face an examiner who can decide to expand your case to cover multiple tax years and multiple issues.

I can't tell you how many "do it yourself" types came in to handle the audit themselves and messed it up big time.

How about those tax audit protection services (like the ones offered when you use Turbotax software)? I always wondered if audited, are those services helpful or is it just hype?

 

[Purron]

How about those tax audit protection services (like the ones offered when you use Turbotax software)? I always wondered if audited, are those services helpful or is it just hype?

Don't know. Never had any experience with them.

 

[DAYDREAMER]

I can't tell you how many "do it yourself" types came in to handle the audit themselves and messed it up big time.

Just Curious, Would an auditor take advantage of an individual, or work with the individual to make the taxes exactly right?

 

[Purron]

Just Curious, Would an auditor take advantage of an individual, or work with the individual to make the taxes exactly right?

I worked there many years ago so am sure things are much different now. When I was there, it really depended on the auditor. Many were quite aggressive, others not so much.

 

[Texas Proud]

Just Curious, Would an auditor take advantage of an individual, or work with the individual to make the taxes exactly right?

I worked a few years on the other side of the audit... almost all of the auditors I came across were 'new' and really did not know the tax laws that well... Most of the times it was teaching them what to look at...

I did get one who did estates.... we kept going back and forth on some points that I had all the backup... he finally said that he needed to get 'something', so I could choose what I was willing to 'give up'... since it was cheaper to give in than fight (for the taxpayer), we gave up something that was clearly ours just so we could take advantage of some better savings on some that we not so clear....


BTW, I was involved with one of the random audits back when they used to do them.. it was a split year return as the husband had died... they owned lots of real estate, oil wells, banks, etc. etc... about $2 mill in income back in the mid 80s... the guy could not find a single thing wrong with the return even though income had to be split and the return was probably 200 pages. With a random audit, they must check EVERYTHING... so every number had to have backup... it took him a couple of weeks to do it and it took me probably 40 hours to show him all the stuff...

 

[Texas Proud]

Just wanted to post this separately.... if an agent is there to audit... ask if he is a special agent... not as knowledgeable as some, but from what I heard these are the guys that come around to try and put you in jail... do NOT talk the them... get a lawyer... not an accountant... a lawyer...

(maybe some lawyer can give more on this)...

 

[Purron]

I worked a few years on the other side of the audit... almost all of the auditors I came across were 'new' and really did not know the tax laws that well... Most of the times it was teaching them what to look at...

I did get one who did estates.... we kept going back and forth on some points that I had all the backup... he finally said that he needed to get 'something', so I could choose what I was willing to 'give up'... since it was cheaper to give in than fight (for the taxpayer), we gave up something that was clearly ours just so we could take advantage of some better savings on some that we not so clear....


BTW, I was involved with one of the random audits back when they used to do them.. it was a split year return as the husband had died... they owned lots of real estate, oil wells, banks, etc. etc... about $2 mill in income back in the mid 80s... the guy could not find a single thing wrong with the return even though income had to be split and the return was probably 200 pages. With a random audit, they must check EVERYTHING... so every number had to have backup... it took him a couple of weeks to do it and it took me probably 40 hours to show him all the stuff...

This is very interesting. I'm not surprised most of the auditors you dealt with were new. The IRS had a lot of turnover when I was there. The pay's not that great and there was lots of pressure. I'll never forget getting cases marked "PDT" which stands for "potentially dangerous taxpayer". These were the kind of people who wrote threats the the IRS and we had to have people with guns standing by when dealing with them. We also had so many bomb threats it became routine to evacuate and stand outside the building while security checked things out. These are some of the factors that inspired me to leave after a short period of time. You're right about those "random audits". Thank goodness they don't do those anymore.