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.


Pink Overalls @DIY Home Staging said...

I am glad your story has a happy ending. Apparently, you kept good records and didn't "get greedy."

I've used TurboTax for a few years, too. Even though we own a small business and have rental properties, TurboTax makes it easy to file returns. Working with numbers is at the bottom of my skill list, in fact I honestly feel I am numerically dyslexic. Still, I always have confidence in our tax returns, and feel we pay only what we owe in taxes. It's good to hear that your experience is the same.

A Pretty Pastime said...

Working with numbers is at the bottom of my skill list, too!

I wonder what the brain of the person(s) who invented TurboTax must be like!

Thanks so much for writing!

Marti said...

I'm so glad it worked out for you. Thanks for letting us know what it is like. I think most people dread the IRS letter notifying an audit is coming.

gail wilson said...

whoa! I always worry about that--so happy it turned out so well for you katy! That's awesome that you get a refund! woohoo!

great post, thanks!

Becolorful said...

Mike and I went through this a couple years ago. They did a complete audit of everything. Mike is self employed so that plus the home office are most likely what triggered our audit. He has several businesses and ours was quite complicated and we did hire an attorney and our CPA was clocking in frequently too. In the end it took six months and cost us almost $10,000 in lawyer and CPA fees and then we got the letter that there was a no change order. We just had to prove that we were right all along. Our examiner was also very nice but it is still rather intimidating but we had nothing to hide either. So glad yours turned out as well as it did.