The IRS Audit Blog

Archive for the ‘Audit Help’ Category

Question: Why do I want an auditor possition?

I have an interview for an auditing position. They always ask this question “why did u decide to become an auditor?”. I’m having difficult time answering this one because I really don’t care whether its tax or auditing position I juts want to get a job and then I’ll see if I like it or not. Obliviously I can not give such an answer. What do you think I should answer though? Thanks

Answer: You like working with numbers, have good attention to detail, like to get things done properly and are structure dependent.

State Faults Holland District’s Budget Practices

The Holland Central School District has enjoyed a full piggybank of reserve money over the years, something state auditors feel is a detriment to the community’s tax base. An audit compiled by the Office of New York State Comptroller examined the district’s budgetary practices for the last five years and stated the administration and School Board “did not prepare reasonable budgets” from the …

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Question: Can you sue your CPA or tax preparer if the IRS audits your tax returns and finds a mistake made by the CPA?

I was audited by the IRS for my 2004 federal income tax returns and they found an error, which then affected my 2005 federal returns. I am being charged interest for both years. I am appealing their decision but I would like for my CPA who prepared my returns to share in the mistake. Is it possible to sue your CPA for such mistakes and is it common to sue the tax preparer for mistakes on income taxes? It appears that the CPA was either not aware/familiar with a tax law or just made a mistake. Whatever the case, I was audited and I have to pay for this mistake because I signed the tax returns. Please help!

Answer: You can’t sue the CPA for the tax amount, you would have had to pay that amount anyways. As for the interest, you had use of the money for the time that you didn’t pay the tax on it, but you could ask the CPA to pay for the interest. If there is any penalty the CPA should definitely pay for that. Also, you might see if you can some of the tax prep fee you paid returned to you. You might also want to look for another tax preparer, one who is more up-to-date on tax law changes. If the CPA refuses to pay anything, then you could sue him, more than likely in small claims court, and also report him to your state’s CPA society.

A Small Group of Major Corporations Commit $500,000 to Help Churches in Nine U.S. Cities

National Church Purchasing Group, Inc, the Nation’s Largest Ministry Group Purchasing Organization Has Partnered With Ricoh Global and Several Other Major Corporations to Provide Major Funding to Help Churches Develop Their Ministry.

IRS Audit Help

Question: I refiled my taxes with the assistance of an attorney. I only $448. But they still say I owe 38Gs on 70Gs.?

I have sent this paperwork to the IRS. They have taken my returns consistently since the audit in 2005 and again this year. Can I get my money back?
Rephrase: In 1999, I file my own taxes on a 1040ez form. I wasn’t familiar with how to report my stock option earnings at the time. In addition, the company I worked for lumped all earnings into one W2 – the total earnings for that year was 70,000. Base wage + Stock Options. Taxes were automatically taken out when I cashed in the options. However, my filing gave the IRS the impression that I had additional earnings. In 2005 I was audited due to a mistake on my return. The result was – I owed 42, 000 in taxes in 1999. I refiled with the assistance of a CPA / Tax Attorney.
The result was that I only owed 440.00 in taxes for 1999. My attorney submitted the appropriate tax forms in 2006. This year I received a letter that my stimulus and tax return was taken again for 1999. Which now states I only owe $38,000

Answer: Okay, new sequence.

You exercised (and sold?) stock options in 1999. These were NSOs where the spread is included in the W-2 in box 1, after which, your basis in the stock was the FMV on the day you got the stock. If you resold the stock the same day, your capital gain would have been ZERO.

Unfortunately, you didn’t file a schedule D showing the sale of the stock until recently. Without knowing your basis, the IRS used $0 and taxed you not only on the spread, but the ENTIRE FMV of the stock.

This caused you to appear to have considerably more income. With the under-reporting statute being 6 years, you could get hit with tax (say 35%), an accuracy penalty (20%-25%) and interest. This could easily cause you to owe $38K if the FMV had been, say $60K.

When you refiled, the tax return had to be sent to the statute group. They had to verify that your return was still within statute and how much of the additional tax had been incurred/paid in the previous 24 months. This adds weeks to the 1040X process, which was already 8-12 weeks to begin with. If you did this recently, there hasn’t been time to process it.

So…in the meantime, the IRS thinks you still owe and it’s still grabbing refunds. When the dust settles, if you were able to show enough paperwork to show it was in fact a same day sale of an NSO, you’ll be okay and the excess refunds will be returned to you.

Intuit TurboTax Home & Business: Comprehensive Help for Sole-Proprietor Taxes

TurboTax Home & Business’s attention to detail and excellent data-import features make it the package of choice for sole proprietors with complex tax situations, but it’s expensive and it might be overkill for some sole Schedule C filers.

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Question: Has anyone notified the IRS when in a combat zone?

I posted this in the tax section and that was useless so i’ll try here:
I was on the IRS website and stumbled upon and Armed Forces link and it said you can email them your info and well then it went on to say”Working with the Department of Defense, the Internal Revenue Service identifies taxpayers who are serving in a combat zone so that we may suspend compliance actions, such as audits or enforced collections, until 180 days after the taxpayer has left the zone.” My husband is in Iraq now and owes a large amount from last year’s taxes so maybe this might give us more time to pay. Has anyone done this? What did it do for you?

Answer: just call them. My husband went to Korea and I got letters saying he needed to send in his tax returns or something from the year that he went to bootcamp ( i guess he didn’t do his taxes).. and I called him they gave him a 30 day extension because he was coming home soon. They might need you to fax something proving where he is.. in our case we didn’t have to fax anything.

Were controls put in place?

 MANILA, Philippines – Last week, my house guest was my wife’s nephew Carlo C. Muñoz, a young journalist based in Washington, DC. He writes two to three articles for the Internet daily news called Defense Daily, that publishes news, features, etc., carried in eight to 10 pages in print. His beat is The Pentagon where the military top brass are now discussing the budget of the US Armed Forces …

Tax Audit Defense

Just Energy Reports Third Quarter Results for 3 Months and 9 Months Ended December 31, 2010

TORONTO, ONTARIO–(Marketwire – 02/10/11) – Just Energy Group Inc. (TSX: JE – News ) Highlights for the third quarter ended December 31, 2010 included: — Operating Results — Sales (seasonally adjusted) – Up 10% per unit — Gross Margin (seasonally adjusted) – Up 5% per unit — Adjusted EBITDA – Up 25% per unit — Distributable Cash after Gross Margin Replacement – Down 11% per unit …