Posted by SusanL.–FL on March 14, 2000 at 09:58:53:
No. 4 (in your list) is what ‘flagged’ my return…and they were ligitigate deductions (because of my ‘contractor’ status).
But get a load of THIS! She labeled me a ‘turtle’ (HER words!) because I supposedly ‘had my home on my back’ (according to her). She then proceeded to try to disallow ALL of my $deductions$ for that year. THEN she started to audit the year before THAT and the year before THAT!!!
By then I had hired a CPA to ‘represent’ me. (Representing myself was something, [I found out later] that I shouldn’t have done…even though—who better than I would know my receipts?? Still doesn’t work that way 'cause they (IRS) are VERY cagey.
They got to the point, on one of my back tax years, where the Statute of Limitations was ready to expire. Guess what!! They sent me a registered letter asking ‘if I would be SO kind as to waive the Statute’ so that they could proceed with their audit.
I thought, ‘are they outta their mind’?
They kept digging and digging trying to find something–and couldn’t. With the few knick knacks that they came up with and the cost of the CPA, it cost me $8,000 !!! plus two years lost from my life span.
Posted by John (TX) on March 14, 2000 at 11:40:21:
Ellis,
Doug’s comments are correct, and Susan’s are just scary.
It’s simply a matter of time and resources. A computer selects returns for audits. The IRS has only so many auditors. Consequently, only a certain number a year are selected. And, as Doug points out, of those selected not all get done.
This computer selection process takes place early in the tax season. Which is why they say, “don’t file early.” I know people that take it a step further. They file an extension every year for the sole purpose of trying to avoid an audit. The theory is that by the end of the extension period (August) all the returns to be audited for that tax year have already been selected.
I had a friend who works in the IRS. She told me what some of the items that the computer picks on and red flags.
10% or more gift to charities (IRS says the average contribution is 2 to 3%)
business in the home
Expenses for working out of town (mileage, meals, motels, etc.)
and the list goes on (those are ones I can think now)
She also said that with way the system was set up that the computer pulls(flags)so many names to audit early that they create a backlog which never sees the light of the day-no audit. Hence, she recommended not filing early, but waiting. Now, I’m not worried about an audit, but what a waste of time it could be. So, I’ve got my taxes done and have a small refund due; but, I’m not going to summit them until later. I suppose time will tell. Maybe someone out there knows more about this. This friend told this to me some years back and maybe it has changed. I don’t see her anymore, she moved.
