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Had IRS Audit today...
I got an audit notice on my 2003 tax return and the appointment was today. Since I work in outside sales, they were questioning my business expenses, mileage and automobile (Porsche)...
The examiners grilled me pretty good and covered everything possible, and I had all documentation. After an hour, they left the room and one of them came back later to tell me that I was all set...and could go home without penalty. This was no surprise to me, but Im glad that they didnt pull any rabbits out of their hats to hammer me with. If you ever get audited, bring every piece of documentation possible...you want to establish a pattern of "trust" that you have a history of documented deductions. Be nice but firm and professional. I recorded everything on a little tape recorder. I posted this here cause it may spark some discussions etc.... |
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03-18-2005, 03:11 PM
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Join Date: Nov 2002
Posts: 1,955
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Roughly how high were the claimed expenses in relation to your income?
Do you think the audit was random, or was it triggered by your expenses being extraordinarily high in relation to your income? |
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03-18-2005, 03:15 PM
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Dept store Quartermaster
Join Date: Jul 2001
Location: I'm right here Tati
Posts: 19,858
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I'm with Brian, details
 Were you showing losses? I mean what threw up the flag?
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Cornpoppin' Pony Soldier |
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03-18-2005, 03:31 PM
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The auditors couldnt/wouldnt tell me exactly what threw up the red flag for the audit. They honestly didnt know and could only speculate. The women did tell me that "these are determined by computer algorhthms and not done randomly"
One of the things was that I took a Section 179 deduction on the Porsche, which is allowable during the first year that it is put into "service".... and obviously after I showed proof of registration, repairs, insurance and mileage...this was not an issue to them. There were a couple of other things, such as large bank transactions that they questioned...but they all checked out with documentation too. BTW...the most boring/plain offices in the world belong to the IRS. White walls, no pictures, boring old tables and chairs... they do that on purpose apparently. |
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03-18-2005, 06:09 PM
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Senior Member
Join Date: Jun 2000
Location: N. Phoenix AZ USA
Posts: 28,943
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I was a "on the road" salesman for years and went through several audits. Its the "home office" and lots of on the road that is the flag in this case. Same outcome as Sonic after showing them my receipts. Hope I do not have to do this anytime soon...
JoeA
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2013 Jag XF, 2002 Dodge Ram 2500 Cummins (the workhorse), 1992 Jaguar XJ S-3 V-12 VDP (one of only 100 examples made), 1969 Jaguar XJ (been in the family since new), 1985 911 Targa backdated to 1973 RS specs with a 3.6 shoehorned in the back, 1959 Austin Healey Sprite (former SCCA H-Prod), 1995 BMW R1100RSL, 1971 & '72 BMW R75/5 "Toaster," Ural Tourist w/sidecar, 1949 Aeronca Sedan / QB |
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03-19-2005, 06:34 AM
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Registered
Join Date: Sep 2001
Location: Dismal Nitch, AZ
Posts: 9,042
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Quote:
The letter instructed her to go to an address, the building had the address # on the outside but nothing else. The room she was led to had no # on the door, and nothing on the walls, plain table/chairs, etc. ...as you say. She was asked very detailed Q's by one person who was civil but not overly polite, had all her receipts/info with her, and was "released" after ~ an hour. . 'Business owner (home office, too) since '79 and I have never been audited myself. Knock, knock, ...
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Don . "Fully integrated people, in their transparency, tend to not be subject to mechanisms of defense, disguise, deceit, and fraudulence." - - Don R. 1994, an excerpt from My Ass From a Hole in the Ground - A Comparative View |
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03-19-2005, 08:16 AM
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Registered
Join Date: Jun 2004
Location: Colorado
Posts: 850
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Glad to hear you didn't run up any penalties...
 The bummer about the situation is that the IRS spent our tax dollars to audit you for no reason... maybe it is time for a new algorithm?  Your advice is right on... As a tax preparer I've seen my share of IRS audits and from my experience you're guilty until proven innocent. If you don't have documentation of that deduction on your return... You pay the consequences. It's that simple. I read somewhere that the IRS is increasing audits of individuals 30% from last year, so don't be trying to cheat Uncle Sam unless you're willing to pay the consequences... 
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83 SC (gone) / 72 T (gone) |
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03-19-2005, 09:57 AM
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1.367m later
Join Date: Feb 2002
Location: small farm town Iowa..........at last
Posts: 6,357
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Quote:
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non velox ad propitiare, verisimile non oblivisci If it's not The Original Automotive Innovations and Restoration, then it's just hot AIR. |
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03-19-2005, 12:30 PM
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Join Date: Jan 2000
Posts: 6,950
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Quote:
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03-19-2005, 12:48 PM
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Registered
Join Date: May 2001
Location: Peoples Republic of Long Beach, NY
Posts: 21,140
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afaik
the IRS has business type specific in-house booklets that anyone can obtain. The markers are different for a pizza place vs a dry cleaner. There was a charge for them.
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Ronin LB '77 911s 2.7 PMO E 8.5 SSI Monty MSD JPI w x6 |
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03-20-2005, 09:10 PM
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993 Cab
