Friday, February 22, 2013

Phony IRS scams

The IRS has come out today and publicly warned taxpayers to be wary of phony IRS audit scams. They remind us that IRS never contacts taxpayers via email or social media to initiate an audit or to correspond with you directly regarding your account.

Also: IRS never asks for personal info such as PIN numbers or passwords to bank accounts.

The ONLY official IRS website is Any other website looking like or claiming to be IRS is bogus.

If you receive a phone call, fax or letter from IRS and you have any reason to suspect that it is a scam, you can call 1-800-829-1040 to determine if it is legitimate.

Suspicious emails should be forwarded to

Tuesday, February 19, 2013

Think you’ve been getting screwed by IRS?

What would you do? You are minding your own business, and out of the blue you get a call from someone who claims she is from IRS, that you are being audited, and that lucky for you your case has been assigned to her. Lucky because she knows all about you and wants to get together…

You’d probably ignore her. This is what Vincent Burroughs did, for a while anyway. Problem was he was being audited and she was the agent assigned. The audit ultimately didn’t go very well, and he owed money. However, he alleges that as the audit progressed, he was subjected to persistent sexually suggestive remarks, overtures & texts. She even texted a picture of her to him in her underwear doing... well never mind.

Finally the agent showed up at his house dressed provocatively and threatened him with substantial financial penalties if he did not “give her what she wanted”, which by the way, was not financial information. Mr. Burroughs gave in and was allegedly forced to submit to the IRS agent physically, against his wishes.

Now he is suing IRS for damages, claiming among other things that he suffered anguish, humiliation, mental distress, depression, loss of income, and loss of trust in governmental authority. His case is pending.

My thoughts: All of the things he allegedly suffered are typical in an IRS exam anyway, with the possible exception of humiliation.  And who knows, maybe that was a function of their meeting at his house. (If I were him I’d probably leave that part out.) Beyond that I’d say his damages were typical and hardly worth a lawsuit. Besides, he can now legitimately claim IRS has screwed him, and besides the obvious benefit, he now has bragging rights. 

Friday, February 8, 2013

Avoiding an Audit

It’s that time again, Tax Filing Season! And with it come endless questions and articles about how to avoid a costly, nerve wracking, and time consuming audit from IRS. In my many years of dealing with IRS exams it is apparent that you cannot bullet proof any tax return from selection, but there are a few simple steps you can take to lower your odds of having any entanglements with “The Man”.

1)      Don’t make any mistakes. Many tax returns are selected because they are patently wrong to the casual observer. Clearly inappropriate deductions, math errors, incomplete forms or missing schedules all cause IRS computers to hit the reject alarm and increase your chances of an inquiry.

2)      Disclose the Details. Attach supporting schedules with as much relevant info as necessary (but not unnecessary data) that gives a reviewer a good picture of the source of your deductions. Large amounts labeled “Miscellaneous” or other nondescript terms will only create suspicion and focus attention on your return.

3)      Match those 1099 forms. Be very diligent to include all your 1099 income in the appropriate category. List them out in detail. IRS is very effective in matching these forms to your return and if they have a problem doing so the response will range from simple letter correspondence up to an audit.

4)      Don’t be greedy. Pigs get fat but hogs get slaughtered. If you are way out there with your deductions and present a picture that seems unrealistic, chances are that IRS computers will recognize this and want to ask you to explain things. Claim what is correct, not what you think you can rationalize.

With a little bit of diligent work up front, you can go a long way towards preventing a major hassle and possible expense later.