Rickresource Rickenbacker Forum

Yesterday in the mailbox I see a rather large envelope from the IRS. Immediate thought, it's an audit notice! OMG, say it ain't so, Joe! I have never been audited so seeing this in the mail it seemed obvious I was about to get my first. There were six pages inside with lengthy explanations and form revisions. After nervously, thumbing through all of these pages I discovered I owed them an additional... $7.00
My heart kicked back in and I gladly wrote them a check for $7.00. There goes the money for those 'picks' I was going to buy.

Nice "surprise"!

Mine was due to a mistake my old accountant made a couple years back. I owe them enough to buy a couple of nice Ricks..

Oh well, it could be worse, at least they don't want to audit me... So far...

A friend of mine was recently audited.... who runs his own business. He learned from the IRS agent that they have a focus on proprietors and small businesses, and those who file a single return (for both personal taxes and their business taxes) and scrutinizing at what are being classified as business expenses.

8mileshigher wrote:A friend of mine was recently audited.... who runs his own business. He learned from the IRS agent that they have a focus on proprietors and small businesses, and those who file a single return (for both personal taxes and their business taxes) and scrutinizing at what are being classified as business expenses.

Oh great. Just what someone trying to hold a small business together in these tough times needs, another headache in the form of the IRS.

Congrats on only owing the IRS $7 btw.

Its all well until another comes through the door wanting 2k more. The small business is always scrutinised and if investigated can easily break a business.Naturally HM Revenue & Customs would expect you too have put insurances in place with your accountant before they investigate (tear strips off you).
I suppose the words of E.T. be good! is paramount in running a small business.Now being good is sometimes tricky
finally yeah I did over use the smilies a tad i know, i know 3!!!

paologregorio wrote:

8mileshigher wrote:A friend of mine was recently audited.... who runs his own business. He learned from the IRS agent that they have a focus on proprietors and small businesses, and those who file a single return (for both personal taxes and their business taxes) and scrutinizing at what are being classified as business expenses.

Oh great. Just what someone trying to hold a small business together in these tough times needs, another headache in the form of the IRS.

Congrats on only owing the IRS $7 btw.

Do I hear a second? I also fall into this category. My expenses are minimal but nonetheless, they are write offs. Hopefully, the letter requesting the seven bucks will be the only one I get from them.

Not bad, Stan.
I'm still trying to pay down my $7,000.00 bill to the IRS.

*&$$!!@#@!** unconstitutional tax system!

paologregorio wrote:

8mileshigher wrote:A friend of mine was recently audited.... who runs his own business. He learned from the IRS agent that they have a focus on proprietors and small businesses, and those who file a single return (for both personal taxes and their business taxes) and scrutinizing at what are being classified as business expenses.

Oh great. Just what someone trying to hold a small business together in these tough times needs, another headache in the form of the IRS.

Congrats on only owing the IRS $7 btw.

Yes, they like to go after small businesses, the big guys aren't necessarily more honest, but they have teams of accountants and lawyers who can keep them tied up for a long time. The little guy is just easier to go after and "get results", which is, I'm told, what the auditors are supposed to do.

Now, there are a lot of small businesses that do take deductions that aren't exactly legal, especially if they are doing their own returns. They may not be trying to cheat, they may just not know all the rules (who could?), so going after them is far more "profitable" for the auditors. One of these things that a lot of small farm types get caught on is lumping the chicken feed in with the cattle feed, and other legitimate supplies, then not reporting the income from selling a few eggs on the side.

Even if playing by the rules and trying to be honest, mistakes happen. Even if using accountants and lawyers, mistakes happen. Unfortunately, when the IRS (or the state in our case) get around to finding the error, it's often a year or two later so not only do they get the tax you owed, they add on interest and penalties, which can add up to a lot several years down the road...

Too bad there isn't a Geithner/Rangel get out of jail free, avoid interest and penalties, and keep your current job check box for such folks.

cjj wrote:
The little guy is just easier to go after and "get results", which is, I'm told, what the auditors are supposed to do.

Now, there are a lot of small businesses that do take deductions that aren't exactly legal, especially if they are doing their own returns. They may not be trying to cheat, they may just not know all the rules (who could?), so going after them is far more "profitable" for the auditors. One of these things that a lot of small farm types get caught on is lumping the chicken feed in with the cattle feed, and other legitimate supplies, then not reporting the income from selling a few eggs on the side.

Even if playing by the rules and trying to be honest, mistakes happen. Even if using accountants and lawyers, mistakes happen. Unfortunately, when the IRS (or the state in our case) get around to finding the error, it's often a year or two later so not only do they get the tax you owed, they add on interest and penalties, which can add up to a lot several years down the road...

I think your synopsis is exactly what is going on .... they go for easy targets, ones to pump up their statistics on how many violators they nail, and then the tax authorities can pat themselves on the back that they are doing a good job. Personally, I think the spouse of any small business owner is entitled to a BMW for making deliveries and post-office runs.... as long as you keep a mileage log...

Uh... one silly question.... wonder what happens if the cattle eat some of the chicken feed or vice-versa..... there's a messy tax return !

8mileshigher wrote:

cjj wrote:
The little guy is just easier to go after and "get results", which is, I'm told, what the auditors are supposed to do.

Now, there are a lot of small businesses that do take deductions that aren't exactly legal, especially if they are doing their own returns. They may not be trying to cheat, they may just not know all the rules (who could?), so going after them is far more "profitable" for the auditors. One of these things that a lot of small farm types get caught on is lumping the chicken feed in with the cattle feed, and other legitimate supplies, then not reporting the income from selling a few eggs on the side.

Even if playing by the rules and trying to be honest, mistakes happen. Even if using accountants and lawyers, mistakes happen. Unfortunately, when the IRS (or the state in our case) get around to finding the error, it's often a year or two later so not only do they get the tax you owed, they add on interest and penalties, which can add up to a lot several years down the road...

I think your synopsis is exactly what is going on .... they go for easy targets, ones to pump up their statistics on how many violators they nail, and then the tax authorities can pat themselves on the back that they are doing a good job. Personally, I think the spouse of any small business owner is entitled to a BMW for making deliveries and post-office runs.... as long as you keep a mileage log...

Uh... one silly question.... wonder what happens if the cattle eat some of the chicken feed or vice-versa..... there's a messy tax return !

Well, that synopsis is pretty much what our accountant told me...

This farm stuff can get really messy, especially when you run it as a corporate entity as we do. So, we've got CPA's and lawyers involved, so they deal with the messy forms. Unfortunately, it still doesn't completely save you from someone making a mistake...

paologregorio wrote:

8mileshigher wrote:A friend of mine was recently audited.... who runs his own business. He learned from the IRS agent that they have a focus on proprietors and small businesses, and those who file a single return (for both personal taxes and their business taxes) and scrutinizing at what are being classified as business expenses.

Oh great. Just what someone trying to hold a small business together in these tough times needs, another headache in the form of the IRS.

True, but sadly, it is a commonly abused thing. People occasionally ask me how to (in not so many words) cheat on things like that, and I always tell them "you don't want an accountant that will help you cheat the IRS, becuase how do you know they're not willing to cheat you too?"

Whats the difference between a Pelican, a Sparrow and the IRS?












They can all stick their bills up their @ss.....


Eden.

What is this "personal tax" thingy?
I mean, here in Israel - we pay income tax (up to %33), social security (5%), health tax (%4) and then we pay 15.5 VAT on everything we buy, some things have extra taxes, like cars which have 140% taxes (including VAT).
As personal people, we can't get any of the tax back, how does it work in the states?

gibsonlp wrote:What is this "personal tax" thingy?

As personal people, we can't get any of the tax back, how does it work in the states?

It would almost be easier to explain the Evolution of the Cosmos