being audited by the irs-- any advice? -- mini update - Mothering Forums
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#1 of 18 Old 09-02-2008, 06:10 PM - Thread Starter
 
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ugh... I'm alternating between trying not to puke, and just trying not to think about it.

I got the letter on friday. I'm being audited for my 2006 tax returns. What do I do now?

Texmati-- Knitter, Hindu, vegetarian, WOHM. Wife to superdadsuperhero.gif and mom to DS babyf.gif24 months, and DD boc.gif 8 months! .

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#2 of 18 Old 09-02-2008, 06:26 PM
 
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I think you hire a CPA, bring them all the documentation, and try not to worry.

Ask the question to the IRS auditor: How much do you feel I owe?

If you can deal with the answer, you pay the $$$ and walk away.

I really would like to see taxation reform, but I am not holding my breath!
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#3 of 18 Old 09-02-2008, 09:09 PM
 
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Been there, done that... not fun. It was many years ago, and it wasn't fun... they decided that I was wrong and they made adjustments and added on interest backdated to when the return was dated and I paid them a small amount until it was finally paid in full. You can hire CPA who has experience with the IRS, and see if they can tell you what you should have done, but in the end, in my opinion, the IRS wins. Good luck
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#4 of 18 Old 09-02-2008, 09:27 PM
 
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We went. They were right. They seemed to like that we came in with a positive (as positive as you can get) not a negtive attitude. The person handling our account was not out to get us in any way. We were just unlucky enough to get flagged that year.

We had not done our own taxes but it turned out our accountant at the time was under investigation for tax evasion. Anyway we paid our back taxes and some interest on the spot. It was about $1000

Just a warning-because they found an error on the forms for that year they went back another year and found an additional error in those forms which cost us more.
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#5 of 18 Old 09-02-2008, 09:53 PM
 
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Originally Posted by brooklyngirl View Post
We had not done our own taxes but it turned out our accountant at the time was under investigation for tax evasion. Anyway we paid our back taxes and some interest on the spot. It was about $1000
A similar thing happened to us. It had to do with an IRA and they way the accountant filed it. It was wrong, we paid it...and the interest added on for the error/penalty...
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#6 of 18 Old 09-02-2008, 10:05 PM
 
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Just a warning-because they found an error on the forms for that year they went back another year and found an additional error in those forms which cost us more.
I do not have personal experience with this, but someone I know and trust greatly was audited this past year and they pulled the same thing- her CPA was very experienced with audits and said it happens all the time. They said, if you pay us "x" (in this case $1500) we won't go back and check past years returns.

While her CPA was very experienced etc, he still said- the $1500 was well worth the $ for her not to have to be drug through everything again. (He stood to make more $ if they did go back through the years, and it is his "job" and she has been using him for years, so I don't think it was just his way of taking the easy route- I'm sure he has a past history that led him to believe it was the best course of action) but...$1500 is a lot of money to some and not as much to others, so its not something that would work for everyone.

I think its very cruel that the government does things like this...

OP: I hope things go well for you and it is a smooth process
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#7 of 18 Old 09-02-2008, 10:20 PM
 
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ha we got audited for 2005 just this past year... it was a pain, they took alot of our money, lost some of my checks, i tried to get my money back, but they just kept taking our money and our tax returns. i gave up in the end and let them keep the money. i had to laugh because they audited us first on my mistake, ok, i understood, paid it back, but then they came back a few weeks later and claimed that dh had made like 290000 in self employement income, um..... no he did not! he barely made twenty five from his own real job. needless to say, they are hard to fight, hard to get a human to talk to and worse at resolving problems. GOod luck hun.... sorry you have to deal with them

Kristin- Wife to J, Mommy to B (11), M-S (8), and little J (4) and J&J (7 months)
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#8 of 18 Old 09-02-2008, 10:27 PM
 
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My DH's business with his father was audited. My DH proved the IRS wrong. It was kind of funny. I think it cost him almost what he was told he owed by the time he paid for the CPA etc. But he refused to pay the government what they did not deserve.
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#9 of 18 Old 09-02-2008, 10:28 PM - Thread Starter
 
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Thanks for the reassuring responses-- and the warning about past years being audited.

The amount that they are charging is 800$, which to us is a lot of money, but thankfully not the end of the world.

To be honest, reading the replies, I'm hesitant to hire a tax attorney. I just feel that it might be throwing good money after bad.

It really bugs that I still don't understand what we are supposed to have done wrong. We've been doing our own taxes with the tax cut software though, so I guess I don't want them to go back over my stuff.

Texmati-- Knitter, Hindu, vegetarian, WOHM. Wife to superdadsuperhero.gif and mom to DS babyf.gif24 months, and DD boc.gif 8 months! .

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#10 of 18 Old 09-02-2008, 11:08 PM
 
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Well my mom and dad were audited last year 3 days before my mom died. It turned out my parents did not owe anything and in fact got a $70 refund. GO FIGURE! At the time it was stressful but we had the attitude of you are not even a priority as my mom was literally dying. I am my parents personal representative so I had to deal with everything.

Heidi
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#11 of 18 Old 09-03-2008, 12:28 AM
 
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A similar thing happened to us. It had to do with an IRA and they way the accountant filed it. It was wrong, we paid it...and the interest added on for the error/penalty...
Yep, IRA for us too; we converted and Fidelity did not send us the correct form (1099?) to file .

"It should be a rule in all prophylactic work that no harm should ever be unnecessarily inflicted on a healthy person (Sir Graham Wilson, The Hazards of Immunization, 1967)."
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#12 of 18 Old 09-03-2008, 02:03 AM
 
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As I was filling out the installment agreement form I read this bit under general instructions:

However, before requesting an installment agreement, you should consider other less costly alternatives, such as getting a bank loan or using available credit on a credit card.

WTH? :

"It should be a rule in all prophylactic work that no harm should ever be unnecessarily inflicted on a healthy person (Sir Graham Wilson, The Hazards of Immunization, 1967)."
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#13 of 18 Old 09-03-2008, 09:04 AM
 
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Originally Posted by Emmeline II View Post
As I was filling out the installment agreement form I read this bit under general instructions:

However, before requesting an installment agreement, you should consider other less costly alternatives, such as getting a bank loan or using available credit on a credit card.

WTH? :
Dave Ramsey even suggests this for dealing with the KGB, uh IRS. They are definitely the people you want to get off your back, per DR.

And to OP - CPA and tax attorney are two different things.

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#14 of 18 Old 09-03-2008, 11:33 AM
 
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I went through this for my 06 return. They were questioning my 20K write-off for Katrina losses. They wanted receipts for everything I'd lost. Uh, like I just so happened to have receipts for every sock, dish, ziploc baggie, floor tile, dryer sheet, and pillowcase I've ever owned. I ended up not owing anything, thankfully.

But that made them look at the next year's, which they said I owed $400 or something for a charged-off debt. Okay, I didn't know about that one, y'all caught it, so fine, I'll pay. I was going to do the installment thing, but then I realized (if you read the fine print on the back) they charge you like $115 just for the privelege of using the installment option. For us, for a $400 bill, adding another $115 to let us spread it out to two or three months was ridiculous. Definitely much easier to either pay the whole thing, or put in on a cc or something.
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#15 of 18 Old 09-03-2008, 10:24 PM
 
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Originally Posted by Emmeline II View Post
As I was filling out the installment agreement form I read this bit under general instructions:

However, before requesting an installment agreement, you should consider other less costly alternatives, such as getting a bank loan or using available credit on a credit card.

WTH? :
My husband is a tax attorney, and he does some volunteer work with a legal aid society, and just the other day, suggested this to someone.... The IRS charges a lot of penalty/interest fees, and you can possibly do better by taking out a bank loan, or putting the whole thing on a credit card, rather than pay IRS fees. (I am not an advocate of spending money you don't have, but the interest fees on a cc or bank loan might be less than the fees from the IRS).
Good luck! You can also see if you qualify for low cost/free help from a local legal aid society.
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#16 of 18 Old 09-10-2008, 01:44 AM - Thread Starter
 
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mini update...

I finally broke down and called my daddy!

I was kinda nervous, because I didn't want him to think that DH and I didn't have it together. His response was... "don't worry about it, I get those all the time!"

The 3 of us looked through the papers together, and we decided that the smaller charges were valid, but we will contest the 800 dollar one.

Thanks so much for the advice you guys!

Texmati-- Knitter, Hindu, vegetarian, WOHM. Wife to superdadsuperhero.gif and mom to DS babyf.gif24 months, and DD boc.gif 8 months! .

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#17 of 18 Old 09-10-2008, 07:18 AM
 
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I'm glad you have someone to help you with it.

Good luck with it all.
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#18 of 18 Old 09-10-2008, 09:02 AM
 
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Quote:
Originally Posted by Emmeline II View Post
As I was filling out the installment agreement form I read this bit under general instructions:

However, before requesting an installment agreement, you should consider other less costly alternatives, such as getting a bank loan or using available credit on a credit card.

WTH? :
As someone who is on a payment plan with the IRS and owes a substantial chunck of change, I actually agree with their suggestion. The interest rates and penalties from the IRS are so high that honestly if one can get the money and pay them in full it truly is better than doing a payment plan. Sadly I have no resources to pay them in full and its hanging over my head and will be for years to come.

Mothering since 1992...its one of the many hats I wear.
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