My articles usually dispense advice on how to avoid audits from the IRS. But in this article I respond to an inquiry from a couple that was served with an audit because of the complexity of filing returns, and I offer some advice on how to act in the presence of IRS agents who need to avoid any conflict of interest.
Question: Several years ago, the IRS audited the write-offs my wife and I claimed for theft losses and charitable contributions. We had a brief discussion with an auditor at the local IRS office about the deductions.
As it happened, there wasn’t much else for the auditor to ask about. Most of our incomes were on W-2s that listed salaries, mainly mine from when I worked with Engulf & Devour for several decades, until the conglomerate decided that I and many of my co-workers deserved to be fired for our unwillingness to deviate from ethical standards.
My wife now runs her own business, as do I. Both of our ventures are successful enough to go head-on-head with my former employer.
Our businesses generate sizeable profits and incur many kinds of expenses that are red flags for IRS audits. Which is why we weren’t gobsmacked that today’s mail included an IRS notice telling us that we’re again among the chosen.
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About Julian Block
Attorney and author Julian Block is frequently quoted in the New York Times, Wall Street Journal, and the Washington Post. He has been cited as “a leading tax professional” (New York Times), an “accomplished writer on taxes” (Wall Street Journal), and “an authority on tax planning” (Financial Planning magazine). More information about his books can be found at julianblocktaxexpert.com.