We noticed a large number of taxpayers who claim unreimbursed employee business expenses (EBE) on Schedule A that appear questionable.
In August, we will increase the number of audits for taxpayers deducting EBE on personal income tax returns, starting with the 2011 and 2012 tax years.
There appears to be a bit of scare strategy at work here. Normally, FTB doesn’t do many actual audits of items on income tax returns. Instead, as with most other States, they just let IRS do the bulk of the examination work and then use the IRS results to make changes to the State tax returns. They are explicitly encouraging people who don’t think they will survive an examination to file amended tax returns and do their job for them.
Your clients can file amended tax return(s) if their business expenses do not qualify.
Notice that they mention going back to 2011, highlighting the fact that the Statute of Limitations for California income tax returns has long been Four (4) years, compared to the long-standing Three (3) years with IRS.
Also, notice that the focus of this concern is just deductions on Schedule A of individual income tax returns. It doesn’t mention any problems with expenses claimed on business forms (i.e. Schedule C) or corporate tax returns (hint hint).
Posted in audits, Calif | Comments Off on Calif FTB threatening audits…
Chances of getting audited by IRS lowest in years – The overall percentage of audits was dropped quite easily by only targeting the vocal critics of the DemonRats. Publicizing this fact helps silence others who may dare refuse to drink the Left’s Kool-Aid.
Almost everyone is aware of the normal time-frame for an IRS audit. A year or so after the tax return is filed, a letter is received from IRS announcing an examination and spelling out certain items that they want to see documentation for. How about receiving a letter from IRS now, before your 2013 tax return is even submitted, announcing that it is going to be audited? That was the story of a lady from Bristol, Indiana, who called in to the Rush Limbaugh Show yesterday. She believes that this threatening letter was due to her donations to the Romney 2012 campaign and IRS is trying to scare people from donating to GOP candidates for 2014. With what we know about the BHO Regime’s use of IRS to harass political opponents, who can deny this to be entirely plausible.
Because Rush was out and Mark Steyn was filling in, there was no text transcript of the show as is the case for all of the shows Rush hosts; so I excerpted the audio segments dealing with this topic and hopefully, it will show up in a player here in this post.
I have had cases where clients had come in who had not filed several years of tax returns and IRS or FTB was on their butts to bring everything up to date. In those cases, either implicitly or explicitly, I knew that some or all of those returns could be audited. However, I had never heard of an announced audit of a current year tax return that hadn’t even been filed yet.
I hope Patricia and her husband file for an extension for their 2013 returns and they raise holy hell to their US Senator and CongressCritter to investigate this clear abuse of power and that anyone else in a similar situation does the same. While it’s hard to tell, Congress does still technically have funding power over the IRS. As Mark Steyn says, we need to push back against blatant abuses such as this. If we just meekly bend over and allow IRS to have its way with us, this can only get worse. If enough people stand up and tell BHO and his IRS goons that they will continue to donate to the candidates of their choice, we may be able to slow them down with their Gestapo tactics.
Posted in audits, IRS | Comments Off on IRS Targeting 2013 Returns Before Filed
This week’s episode of Breaking Bad had a sub-plot where the hero’s wife had to deal with her former boss cheating on his taxes. While this is very amusing, it is very unrealistic. I’ve encountered plenty of dense IRS auditors, but any agent would be able to see that the company’s books weren’t being kept on Quicken.