Discussion:No contact from IRS prior to Income Tax Examination Changes

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Discussion Forum Index --> Advanced Tax Questions --> No contact from IRS prior to Income Tax Examination Changes
Discussion Forum Index --> Tax Questions --> No contact from IRS prior to Income Tax Examination Changes

Skasselea (talk|edits) said:

11 May 2008
I just spoke with a prospective client in Arizona. Today, he received a 30-day letter from office exam with changes to his 2005, 2006 and believe it or not, his 2007 tax return. He has lived at the same address for 15 years, has a pretty simple self-prepared return and from all indications, was probably just a random audit selection.


15-20 years ago, it was routine for IRS to send a 30-day letter with NO prior contact, but I haven't heard of this happening in at least 10 years.


Granted, I have not seen the returns or the audit report yet. However, based upon our conversation and 20 years of experience, it sure sounds like a complete IRS screw-up. The taxpayer is going to fax everything to me for review. At that time, I'll post more.


Has anyone else experienced this anywhere in the country? I have believed for the past couple of years that we're heading back to the days of the IRS pre-hearing and garbage like this helps make my point.

Kenb (talk|edits) said:

11 May 2008
Same deal -AZ also: client received audit change letter from Tuscon for Sched C items. Agent said notice had been sent. I replied (truthfully): "I have no doubt notice was sent, but I am equally certain Mr. xxx would not have ignored or overlooked an IRS inquiry". I work in GA and am not otherwise familiar with AZ. The agent has been reasonable about re-opening examination and handling it as correspondence audit.

Skasselea (talk|edits) said:

11 May 2008
Let's talk and figure out what the problem is with this office. I'll contact you tomorrow.

DZCPA (talk|edits) said:

12 May 2008
I have seen this happen many times in CA. Especially when audited by an out of state office. The IRS assumes you are guilty and then you must prove you are innocent.

Skasselea (talk|edits) said:

15 May 2008
Client did not hire me after all. Hired someone local. However, the case is not quite what the taxpayer claimed it to be. First, it was hardly a random audit. Wife made $28K in 2006 & $38K in 2007. Husband had Schedule C consulting engineering and surveying business with $59K income and $75K expenses in 2007. 2006 was similar. Expenses included $32K for car & truck expenses (just straight business mileage) and $26K for contract labor.


I had earlier asked him "Is there anything on your returns that the IRS might have any concern about". I realize that is certainly subject to interpretation, but when contract labor and mileage are equal to your gross receipts....


Second, when you see an audit that focuses on problem areas I am less likely to presume that the taxpayer failed to receive proper notice. Call me a cynic.

Skasselea (talk|edits) said:

15 May 2008
Oh and since it appears that treating employees as independent contractors is going to be a point of emphasis, he may have another issue with which to contend.

Michaelstar (talk|edits) said:

15 May 2008
Treating employees as independent contractors SHOULD be an issue. Has been in the past and will be such an issue in the future.

$59k in gross receipts and $32k in auto expenses - that is a load of crap - this guy should have been audited.

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