Who had been audited by the IRS?

[Robert the Red]

I was audited about 20 years ago, while in graduate school. The first issue (that triggered the audit) was my exclusion of income from a required teaching assistantship -- which WAS excludable for the tax year in question. Then the auditor went on to the entire return, and accused me of fraud at one point, and slapped me with a tax due and fine notice for about $8000 -- about 2/3 my gross annual income, and money I didn't have. I ended up owing nothing at all, because he had made a mistake in interpreting my return and the tax code.

I do not think he was professional, and still have negative feelings about him. He quite literally accused me of a committing a felony, based on less than 2 minutes looking at the relevant form. My $200 payment to an accountant to straighten out the matter still rankles a little.

The whole thing was part of a wave of audits on this issue at that time in Southern California. I have no idea why anyone thought that they were going to make a lot of money by auditing graduate students.

[Nords]

Quote:

Originally Posted by Robert the Red My $200 payment to an accountant to straighten out the matter still rankles a little.

I wonder if that was tax-deductible.

[Brat]

Some how the IRS thinks I represent a taxpayer I do not know. I am not in the tax business at all. First I called them, then I sent a letter. They sent a form for 'withdrawal of representation'. Since I didn't ever represent them I didn't see how I could withdraw. I keep getting envelopes addressed to them c/o me upon which I now write, "return to sender" and continue my blurb that the addresses are unknown to me, that I do not represent them. I even told them to check their original representation records for the taxpayer. Arrah!!!

[Trek]

Of course, when you get down to it, there is no law that says you must pay taxes at all. There are only judicial rulings against people who have challenged the legality of paying taxes.

[LEX]

From Texas Proud: "They have a computer that grades every return... you get a score and then the various offices looks at how many people they have, how many they can look at and pick the highest scoring exams..."

Bingo, you get the prize cowboy! While my friends who practice tax law do not know the c/c++ versions or assembler terms in the custom software commisioned by the IRS that is used for audit trigger scoring, that is precisely the basic result of the 'call the issue and audit" range built into the application of the audit trigger program. You can go loose with the 1040 and still get some serious mileage in high desity income jurisditions like LA, NY and CHI. Its a relational data base program that flags % distribution outlyers. If you really want to test the boundrys of the tax code and the computer program that acts as its rational filter, file based on your domicile being based in Nevada.

Its thie high risk cash intake dentists and plastic surgens that actually replace common sense with greed that get in trouble in those locales, according to classmates of mine that know the scoop.

"Gawd I love the law..."

[Texas Proud]

Lex...

You mentioned about your friends not knowing what is in the program... again, from what I have heard.... NOBODY knows all that is in the program... no one single person... I have heard it is split into different segments and they are at different locations with different people in charge and programmers... even more secret than the Coke formula.... OH.. and BTW.. your return MIGHT have been audited and you not know... (but I think I said this before....)

LOL... file the amended return... that way you stop penalty and interest... it can get to be a bear... I had a friend who did not put down a $400 1099... a few years later he owed over $500... more than the income he had made...

RTR.. this is usual for the IRS... they hire people that don't know the law and are told to audit. They are the lowest of the low... they can not deal with fraud cases... they are blowing smoke up your skirt if they even mention this... if they thought fraud, they would get a special agent to look at your return.. his job would be to see if he can put you in jail..

Here is a tip... if a IRS agent comes by... ask if he is a special agent.. if he says yes... don't talk to him until you get a lawyer... unles of course you are broke and then you are just screwed... unless you did nothing wrong.. which can happen...

Another story from my past.... I knew a secretary whos husband was having IRS problems... they asked me about it... it was a special agent... I said I could not help, but they did not have money... well, the guy started to talk to the agent and he looked into his returns... it seems a former employee had 'ratted' him to the IRS for fraud... but, he had lost most of his records in a fire and was not trying to commit fraud... the IRS agent said he could see about $10,000 owed, but he was looking for some fraud to put him in jail so he just let it go as he could see the guy was not trying to hide anything.... an regular agent would not have left that on the table... so, the IRS can be "OK"...

[scrinch]

I've gotten three letters from the IRS in 32 years. First was regarding the teaching assistant stipend mentioned by Red Robert. After a couple of letters back and forth, the issue was decided in my favor. Second was when I added 2 + 2 and got 3 (back in the days before PC's and CPA's). Oops, decided in the favor of the feds. Third was 2004 when I didn't report some non-qualified stock options properly on my Schedule D. I amended my Schedule D and all was good.

I know I don't need to, but I have kept my tax returns and documentation all the way back to 1974 when I worked after school in a Kinney shoe store. :

[Nords]

Quote:

Originally Posted by scrinch I know I don't need to, but I have kept my tax returns and documentation all the way back to 1974 when I worked after school in a Kinney shoe store. :

I wish I'd kept my tax returns from the '70s.

One of our kid's Christmas presents this year was a framed copy of her first paycheck.

[lloyds]

About 20 years ago. My ex wife had a daycare business in the home and did the normal deductions for home/office. That was the trigger. Once they started they really dug in. One stupid appearing mistake they made when they did the total cashflow audit was a check for $546 that I didn't account for as income. I did. It was a state tax refund from the previous year, and very clearly was shown. We ended up clean but the process ran for over a year, and several trips into Portland to the auditors' office Thinking back now I recall I did fail to report interest on a couple savings accounts. They were really small, like $5, and the 1099 came late so I didn't include them. We had to do an ammended return for those small items. It was ridiculous.

[riskadverse]

I've been audited three time that I remember. Each time the process was handled by mail. One time it came out in my favor with a tax reduction, and twice it came out in the government's favor. All the cases were clear cut. In every case the state followed up with an audit 6 months or a year later. The ammended returns were filed by the IRS and the state, saving me the trouble. My audits were about 3 years after the filing date. Although interest was charged, penalities were never imposed. As you might guess, interest was not awarded for the overpayment.

[tryan]

I got "caught" by the 1099 audit in the early 90's. Had a partner involved in several rentals so we split the interest deduction and filed only 1/2 on each of our returns.

Really helped having an accountant. He wrote the responses so an idiot, third grader the GS7 could understand what was done. A few "rounds" back n'forth and the issue was cleared ... no changes made.

[TromboneAl]

I was audited about 15 years ago, because the IRS couldn't believe I could lose so much money in one year. I did a direct mail campaign for my product and it didn't do well, and I had lost about $20,000 for the year.

Even though I splained it in a statement in my return, the IRS called me in for an audit. I documented everything. They then went on a fishing expedition, but didn't find anything.