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Old 6 August 2022, 09:28 PM   #31
Patton250
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I got the dreaded note in the mail yesterday.

Frankly, I am not very worried. I do everything by the book, and my CPA is all business. He plays zero games. I have not always liked his bedside manner, per say, but I always said, if the day ever comes, I want him by my side.

It is for 2020 which is the year I sold majority share of my business. So the spike in income is clearly what set it off.

So, while I am not very concerned, I am still of course not thrilled to be going through the process. Not sure anyone ever would be. My CPA says this will simply be a pain as there is a lot to do.

That all said, while I have looked online, I have not found too many real accounts of the process.

Anyone here ever go through and Audit. Would love to hear your experience and your advice if you have any.

Thank you,
You got this brother. No worries. You have a good CPA and he/she will make the process smooth.
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Old 6 August 2022, 11:53 PM   #32
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Took a few days off of TRF and now see this.
Cheering for you as always!
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Old 7 August 2022, 12:37 AM   #33
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Ditto

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I strongly urge you to stay home, send your CPA and have them handle all of it. It’s worth every penny.
I had a random audit of my attorney business and trust accounts about 15 years ago. I was smart enough to hire my accountant who sent an associate who was experienced in attorney audits. They asked me one or two minor questions, but I hung out in my office while they worked in the conference room. Worked out perfectly.

Technology has advanced since then. It’s probably worth it for future reference to digitize revenues and expenses so it’s just a matter of spitting out reports.
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Old 7 August 2022, 12:51 AM   #34
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Old 7 August 2022, 01:55 AM   #35
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Thanks guys. The more I learn, the less I’m worried.

Boils down to one thing really, reported revenue. I report everything. And I’m not a cash business. Everything is done in quickbooks. And I’m prone to anxiety. So I don’t play games…with anything.

It’s actually a personal audit anyway. And still, of course, all income has been reported and taxes paid.

And again, my CPA is as straight as they come.

Frankly, I’m actually hopeful it ends up with them owing me money. As I think sometimes he’s too eager to lay as much as possible. But of course, I’ll be thrilled when it’s simply over.

Am I anxious about this? Of course. But I’m feeling okay about it. Just looking to to put it behind me.
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Old 7 August 2022, 02:20 AM   #36
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It’ll be okay, Seth. It’s just an annoying process. But not scary. I was audited awhile back and it was over some art or something, it was very ambiguous. I don’t remember exactly but in the end I simply wrote them a check and they went away. This is a great thread and glad you started it, because it’s valuable hearing other’s experiences and how to emotionally manage it.
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Old 7 August 2022, 07:16 AM   #37
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Originally Posted by superdog View Post
Thanks guys. The more I learn, the less I’m worried.

Boils down to one thing really, reported revenue. I report everything. And I’m not a cash business. Everything is done in quickbooks. And I’m prone to anxiety. So I don’t play games…with anything.

It’s actually a personal audit anyway. And still, of course, all income has been reported and taxes paid.

And again, my CPA is as straight as they come.

Frankly, I’m actually hopeful it ends up with them owing me money. As I think sometimes he’s too eager to lay as much as possible. But of course, I’ll be thrilled when it’s simply over.

Am I anxious about this? Of course. But I’m feeling okay about it. Just looking to to put it behind me.
Don’t be Superdog (easy for me to say) as it seems you’re a straight and narrow guy plus it’s outta your hands now. Knowing you play by the rules should ease your mind. Good luck.
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Old 7 August 2022, 08:23 AM   #38
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Good luck!!!! Doing some decluttering around here. Shreadded many years of tax records, the oldest being from 2004!!! I think I keep the past 3-5 years, this is what's usually recommended. Not sure why I keep any, my guy has copies in his office!!!
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Old 7 August 2022, 09:03 AM   #39
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I received a letter maybe 30 years ago. I had a mutual fund that was worth maybe 80K and it made me 5K that year. But the IRS showed that my profit from that fund was 80K, the value of the entire fund.

Back then it was almost impossible to actually call someone in the IRS, but a telephone operator (remember them) helped me by connecting me to their unlisted number.

I requested an audit to correct THEIR MISTAKE, but eventually the IRS withdrew their demand without admitting their mistake without an audit.
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Old 8 August 2022, 01:15 PM   #40
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I got mini audited a couple years ago and beat them without even needing the help of my CPA. And after their mini audit of my deductions and expenses the IRS claimed I owed them about four or five hundred dollars. (They started off saying I owed them 36K). I knew they were wrong, but I just paid it to get them off my back. Good luck with your audit.
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Old 8 August 2022, 01:42 PM   #41
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IRS Audit

Quote:
Originally Posted by SpectralDodo49 View Post
I received a letter maybe 30 years ago. I had a mutual fund that was worth maybe 80K and it made me 5K that year. But the IRS showed that my profit from that fund was 80K, the value of the entire fund.

Back then it was almost impossible to actually call someone in the IRS, but a telephone operator (remember them) helped me by connecting me to their unlisted number.

I requested an audit to correct THEIR MISTAKE, but eventually the IRS withdrew their demand without admitting their mistake without an audit.

Had something similar with them. Had consulting fees billed to a former employer and a year later they claimed I owed 100% of that income as tax. I told them I'd be happy to pay that tax if they could help me collect the income to go with it. Received a post card that the matter was closed 6 months later.
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Old 15 August 2022, 11:47 PM   #42
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Just a short update:

So far, I am really impressed by the government. My CPA and the auditor have already had the first phone consultation, and they have their first actual meeting tomorrow.

I am grateful that it is all happening fast, and I appreciate them making it happen.

And, I have really learned quite a bit in a pretty short time.

Right now, they are looking at my ex wife's fitness business and GSMC (my motor club). My guess is that the spike from selling my business is what caused the red flag. Then they see these new small businesses that are writing off a lot of taxes. I assume they think we started them to have more write offs and save on taxes.

Interestingly enough, my ex's business was started in the second half of 2020 and GSMC was the year prior. So I understand why they might think I was trying to save on taxes by opening these businesses. Considering the shenanigans it appears people play, I can hardly blame them.

The wonderful news is that both of these are legitimate entities and it is easily provable. She is way more organized than I am, and she has given my CPA everything and then some. I have even found a ton of invoices from monthly website charges to videographers (for car shows) and marketing professionals.

So as this goes on, I am more and more comfortable. Am I still nervous? Of course. I think we are programmed to fear something like this. And I am scared of what I don't know. But I also take solace in the fact that we are 100% in the right with how we did things.

I don't take a lot of huge risks. I don't bend the rules. I even efuse to register my cars in Montana like most high end car owners I know. I do pretty much everything by the book. And this is exactly why.
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Old 15 August 2022, 11:52 PM   #43
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Good news Seth
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Old 15 August 2022, 11:55 PM   #44
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Good news Seth
fingers crossed that is stays this way. feeling pretty good. but dont want to get my hopes up.
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Old 16 August 2022, 12:16 AM   #45
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The tax code is totally insane and is impossible to perfectly comply with, but sounds like you reported every dollar coming in and didn’t cook up any expenses. You will be fine.
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Old 16 August 2022, 06:25 AM   #46
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The tax code is totally insane and is impossible to perfectly comply with, but sounds like you reported every dollar coming in and didn’t cook up any expenses. You will be fine.
my actual one big concern is dinners.

they want justification for them. who I went with, what we talked about...how was it a business dinner.

I take out customers, vendors, and team members 4 nights a week. I can barely remember what happened a few weeks ago, let alone a few years ago.

but it is what it is, I cannot imagine I am alone in that.
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Old 16 August 2022, 09:15 PM   #47
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my actual one big concern is dinners.

they want justification for them. who I went with, what we talked about...how was it a business dinner.

I take out customers, vendors, and team members 4 nights a week. I can barely remember what happened a few weeks ago, let alone a few years ago.

but it is what it is, I cannot imagine I am alone in that.
It is customary to document some detail on the associated expense reports. As it was your company I can see why you may not have been as fastidious as someone in a corporate employee role. But the agency would probably be looking for the customary level of documentation for each expense.
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Old 16 August 2022, 10:38 PM   #48
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Due to Inflation Reduction Act we can all expect one of these on the future!
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Old 16 August 2022, 10:59 PM   #49
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For my last audit, I wasn't being properly represented by my CPA. He just wasn't strong enough in the area of taxation. I then switched to a highly experienced Tax Professional with an MBA in Taxation. The different was night and day. Lesson learned. The misconception is that a CPA is a tax person, and this is not always the case. Financial accounting and taxes are two distinctly different animals.
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Old 16 August 2022, 11:06 PM   #50
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Glad to hear things are progressing Seth.

I get the anxious feeling an audit can bring. Even though you know you’ve done nothing wrong, the fear is that they’ll find something anyway … been there done that
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Old 17 August 2022, 07:36 PM   #51
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This whole thing sounds taxing. Good luck!
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Old 17 August 2022, 08:29 PM   #52
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If things look sticky then this guy might be the answer
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Old 17 August 2022, 10:49 PM   #53
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It’s not funny if you are on the receiving end of an audit in the USA. And if you personally know that Superdog (Seth) is a great guy.
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Old 18 August 2022, 07:36 AM   #54
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This is when CPAs and Lawyer's earn their keep! Best Wishes for a smooth and uneventful audit!
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Old 18 August 2022, 07:57 AM   #55
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Seth, this sucks to hear. I’m sure you’re conducting business on the up and up though so it may be a little stressful and take some time but you will emerge unscathed and triumphant!!


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Old 18 August 2022, 10:37 AM   #56
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my actual one big concern is dinners.

they want justification for them. who I went with, what we talked about...how was it a business dinner.

I take out customers, vendors, and team members 4 nights a week. I can barely remember what happened a few weeks ago, let alone a few years ago.

but it is what it is, I cannot imagine I am alone in that.
Just a heads up, but these business meals may get thrown out in the audit. The audits our firm handled, the auditors stated that meals are not a necessary business expense, rather an ordinary part of a person’s daily life. They gave us a hard time with them each audit. In the end, they allowed only a percentage of the dinners, not the entire 50% amount that was deducted originally on the return.
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Old 9 September 2022, 01:49 AM   #57
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Any update Seth?
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Old 9 September 2022, 02:28 AM   #58
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Any update Seth?
Nothing interesting at this point.

My CPA is just gathering all the info. The good news is I’m really not missing much of anything. Any questions he has had, have been easily answered.

I had an account I closed in 2020. I had to request the old statements from my bank. Once I get that, we submit everything.

So far very smooth. No holes anywhere which is awesome.
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Old 9 September 2022, 02:37 AM   #59
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Nothing interesting at this point.

My CPA is just gathering all the info. The good news is I’m really not missing much of anything. Any questions he has had, have been easily answered.

I had an account I closed in 2020. I had to request the old statements from my bank. Once I get that, we submit everything.

So far very smooth. No holes anywhere which is awesome.
Excellent news Seth. Glad to hear it's going well.
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Old 9 September 2022, 03:59 AM   #60
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part of brandons 'MORE IRS agents' policy... you must be in the top 1%, not surprising.
Exactly.

Good luck with the audit Seth.
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