How To Audit-Proof Your Tax Return Forever: A Recent Close Encounter Of The IRS-Kind
Congress has passed legislation that is supposed to result in a more “sensitive” Internal Revenue Service. You know, not such a lean, mean, tax-collecting machine.
Hmmm . . . . What do you think?
A few months ago, one of my clients (let’s call him Mr. Jones) got one of those IRS “love letters” requesting more information about his return, and the IRS wanted to meet with Mr. Jones in person to discuss the situation.
Mr. Jones (a local small business owner) was required to show up at the local IRS office with all his records. The IRS was questioning the legitimacy of several business deductions — and so the IRS was doing what it is allowed by law to do — demand that the taxpayer prove that those deductions were valid.
Turns out that Mr. Jones lost the audit and ended up owing the IRS a significant amount of money — the additional tax, plus penalty and interest for late payment of that tax. Why did Mr. Jones’ lose the audit? Mr. Jones made two “classic” taxpayer mistakes:
MISTAKE #1:...
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