By Ben Popken March 6, 2009
Like a worst-case-scenario guide for taxes, tax attorney Fred Daly ‘s Stand Up To The IRS helps you prepare for an IRS audit. Best of all, he’s released all the chapters online for free.
Edit Your Comment
I have always filed my taxes honestly, but some one used my SSN at jobs they were getting 1099’s for. So the IRS had tens of thousands of reported income on money I never saw – wham instant audit.
Not knowing why I was being audited, and knowing did nothing wrong I let them come to my house for a “review”. Big mistake, this guy went thru my garage and wanted to see the old cloths and other stuff that was boxed up. Like I was hiding gold bars or some thing. After he left I felt things went good, till I got a letter saying I owed 40k in back taxes. Instantly I went and hired an accountant. We went back and forth with the auditor for 8 months going over every purchase and tracing every dollar I had spent over the past 3 years and where it came from. My accountant had no idea what they were looking for. Suddenly out of the blue the auditor was fired by the IRS, I got a new auditor a real nice
guy. And after not budging one dime on the 40k with the other guy I had an offer for 5k owed. I said no and continued to fight. At that time the new auditor informed me that 1099’s had been reported for years with my SSN. My accountant said they must have figured out it was ID theft but didn’t want to walk away empty handed. After all, the IRS had wasted almost a year and who knows how many tax dollars on my audit.
after almost a year we got it down to $1,200, I still wasn’t happy as I didn’t owe it. The new auditor said it was done and if I wanted to continue to fight, I could do it in tax court. My accountant took me aside and told me the attorney for tax court would cost at least 10k. So I payed it to just end the whole thing..
Total cost of the audit
$4,500 to accountant
$1,200 to IRS
$2,600 in lost wages (time off needed to deal with an audit)
Grand total $8,300
And FYI my Accountant considered this a win. If you get an audit its going to cost you even if you don’t have to pay the IRS. The new auditor also told me at least 90% of all audits the people pay some thing.