Wednesday, May 2, 2012

IRS Audit

I'm writing this post because a year ago in March my husband and I received notification from the IRS that we were being audited. 

I got on line and researched the heck out of IRS examinations (that's what they're called now rather than audits) and only found the usual "You better hire an attorney" and "don't say anything because you might slip up and say something you shouldn't". I found absolutely nothing on the Internet to calm my fears.  So, that is why I'm writing this post~hopefully to help someone else.

FYI, I have used TurboTax for the past 5 years and math is not my strong suit.

All opinions are my own and I am not saying this will work in every case but it worked for us.

After the inital shock, Tommy and I talked about hiring an attorney and then I realized there was nothing an attorney could tell the examiner that I couldn't tell her AND in my mind, hiring an attorney made us look like we needed legal counsel because we had done something wrong. 

I called the examiner, who was very pleasant. (A lot of places online warned about examiners who were pleasant so taxpayers let their guard down). The examiner, I will call her Debra, told me she would need all receipts, documents and returns for 2007-2008. We made an appointment to meet and I gathered all the items Debra requested and Tommy and I went to the local IRS office acting confident but really we weren't.  Debra asked lots of questions and we answered honestly. At the end of the visit Debra decided she may as well examine our returns for 2009-2010. (2008-2010 I owned a small business and there were mountains of papers!)

To make a long story short-everything we received from the IRS we answered immediatley.  Even the dreaded letter in March (2012) from the IRS asking us for a 2 year extension on the returns for 2008 which means the IRS would have until April 2013 to close the file for 2008 :-( 

If Debra asked for a document that was missing we got it to her right away.

Last Thursday we received notification that the examination was complete and if we agreed with the findings of the IRS, we needed to sign off on the paperwork that was sent.  All four years of the examination were done! YAY! Wonderful!! But here's the really wonderful part...not only is the examination no longer hanging over our heads but we are getting a refund! $5025.00 plus interest! (Most of the refund was due to amoratizing business expenses incorrectly).

Just think, if we had hired an attorney it would have exceeded the amount of the refund.

So, in my opinion, there is no need to fear the IRS unless you have purposely tried to "pull one over" on them.

Hopefully none of you will need this information but if you do...I hope it helps.