Today I received a letter from the IRS that my 2007 tax returns are being audited. Less than one month after launching TaxCheatStamps.com.
There's a list of "proposed changes" they want to make to my 2007 return that would require me to pay almost $14,000 in taxes, penalties, and interest. All the "discrepancies" they list are bogus and I have documentation to prove it. I keep meticulous records and always pay every cent I owe to Uncle Sam. We're going to talk to a lawyer ASAP.
There is no doubt in my mind that my family is being politically persecuted for making a mockery of our new Treasury Secretary Tim Geithner and the Obama administration.
Honestly, we're scared. We haven't done anything wrong (and I've got the documents to prove it in storage) but now the IRS is coming after us and they can destroy our lives with a flick of their pen. I don't want to sound like a coward, but I'm so scared I'm literally shaking. We've got a seven-week-old daughter.
I suppose it's a sort of honor to be persecuted like this. I'd really appreciate it if people would blog about this and link to this post. (And a prayer wouldn't hurt.)
The IRS has been used for political attacks before under the Clinton and Nixon administrations.
Thanks for the support:
The correct strategy is for us to buy enough Tax Cheat stamps to make you $14,000 plus lawyer fees.
Good luck. We're with you.
I have plenty of sympathy for you, and I completely understand your fear. These guys can take from you everything you thought you owned, and there's not a damned thing you can do about it. Or precious little, anyway. We were in their cross-hairs once, and it's not a pleasant story. It worked out OK because we had some very good friends, but we were on the edge of loosing our home and at the time our kids were very young. There weren't any political complications, but still it's awful. I wish you the best of luck and success. Get a good lawyer. A VERY good lawyer.
And--while I realize it's easy for me to say this--don't let them shut you down. Or up, either.
I will pray for you. It helped us, in more ways than one, too. My husband is fond of saying that the Lord looks after His fools.
I have plenty of sympathy for you, and I completely understand your fear. These guys can take from you everything you thought you owned, and there's not a damned thing you can do about it. Or precious little, anyway. We were in their cross-hairs once, and it's not a pleasant place to be. It worked out OK because we had some very good friends, but we were on the edge of loosing our home and at the time our kids were very young. There weren't any political complications, but still it's awful. I wish you the best of luck and success. Get a good lawyer. A VERY good lawyer.
And--while I realize it's easy for me to say this--don't let them shut you down. Or up, either.
I will see about getting some of those Tax Cheat Stamps!
I will also pray for you. It helped us, in more ways than one, too. My husband is fond of saying that the Lord looks after His fools.
Sorry about the double post!
The first thing you need to remember is that YOU did NOT make "a mockery of our new Treasury Secretary Tim Geithner." He did that himself, or more precisely he made a mockery of the IRS. You only pointed it out. And the second thing to understand is that they might has taken over the executive branch, but they have not yet taken over the entire judiciary. F
I bet that you're overreacting. The IRS is a machine, not a person. It's a computer program that receives very little human input. I spent lots of time helping people who were panicking over IRS letters, and nearly all of them made the mistake of thinking that someone at the IRS had a personal vendetta against them.
And that's a serious mistake, because it blinds you to what's really going on. It's exactly like a Luddite with a computer problem: The computer does a poor job of explaining the problem. The user takes this as a personal insult and promptly makes the problem worse. The computer responds with an even more opaque error message, the user gets angrier, and so forth.
Don't get caught in that trap, Michael. You are far too small for any human being at the IRS to care about. The IRS taxes 300 million people with about 100,000 employees. They're busy.
To you, the amount of tax seems too high. And I can tell you why: The IRS concluded that it didn't have enough information about your return, and so it inferred the missing information in the worst possible way. You see that as unfair, but if you look at it from the IRS perspective it's the only way to go.
The IRS's big weakness is that it doesn't have the information it needs. Suppose that it's looking at 100,000 taxpayers in your situation, all of whom claim status X but are missing data point Y. You have two choices: 1) assume some reasonable middle-of-the-road figure for the missing data, or 2) assume the data that will produce the highest tax. You can't choose option 1, because some of those thousands of taxpayers really do have the data that will produce the highest tax. You have to choose option 2, because anything else will allow some people to pay less tax than they should.
So take some deep breaths, read what the letter actually says, and then go to IRS.gov. Start out looking at publications, because that's where the IRS focuses what little writing talent it possesses on making the tax law clear. Try to see the problem from the IRS's perspective: Thousands of taxpayers are in your situation. The IRS needs a rule on how to treat each of them appropriately. That rule will involve data points and logical operations on those data points. So you need to understand the rule, understand the data points that it involves, and then provide to the IRS some documents that will adequately prove up those data points.
It's just a computer program, Michael. Literally. Nearly everyone at the IRS does exactly what the computer tells them to do. It would be nearly impossible for you to speak to one of the handful of people at the IRS who are responsible for telling the computer what to do. So all you have to do is figure out how that computer program works, and then talk to it via the human beings who serve it. And leave the paranoid fantasies behind, because they will only make things worse.
The IRS isn't going to respond to anything in a month. It takes much longer for the wheels to grind, whatever they're grinding.
I was audited in years 2004 and 2005, after they disallowed my home interest and charitable giving deductions, and they said I owed about $14,000 in back taxes and penalties. They spend 10 minutes generating a request, and you spend 3-4 hours or more preparing the documentation to make your case. Make copies of everything you send--they lost the documentation I sent for each year (the audits overlapped but did not begin at the same point), and I failed the first time to make copies of everything (of course, I did not send originals, but then I had to make a second set later). The IRS doesn't, of course, reimburse your time and money spent on compliance, and they have nothing but a weak apology for their losing your documentation. (They did acknowledge that they received a package from me, but my only remedy was to resend it. I sent it FEDEX the second time.) In the end it wasn't a stressful process, because I knew, as you do, that I was entirely justified, and was eventually (8 months later) vindicated. But it was frustrating nonetheless.
I would also advise you to relax. I've been audited on occasion, sometimes for aggressive charitable donations (for which I ended up owing some taxes and penalties and interest) and other times for perfectly legitimate IRA contributions (which were fully documented and resulted in no changes to my taxes). While I have considerable contempt for our tax system and the IRS in general, I have to concede that the agents I've dealt with over the years have generally been honest and professional.
Basically there are two possibilities: (1) This is a run-of-the-mill computer-generated audit. (2) Somebody in the IRS or Treasury Department heard about your Tax Cheat stamp idea, was annoyed, and decided to harass you with an audit.
In the case of possibility #1, you should have no problem if everything is indeed legitimate and documented. It just means you'll have to waste a few hours answering their inquiries and providing the evidence. If you're engaging an attorney, it will also cost you a few hundred or a couple of thousand dollars. I don't think you really need an attorney, but the money may be worth spending just for your peace of mind and to have a non-nervous person representing you.
In the case of possibility #2, you've hit the jackpot! You are about to earn your 15 minutes (or more) of fame, while giving the IRS a very black eye. Keep copies of EVERYTHING. Create a contemporaneous diary of all events connected to the audit, and publish a detailed description on your blog in near real time. Pull those documents out of storage TODAY, scan them into your computer, and post the PDF files on your blog for everyone to see. (Among other things, it means that you don't have to worry about those documents mysteriously "disappearing". The Internet is forever.)
If the IRS dares to try to screw you over, they'll have to do so under the glare of publicity (e.g., frequent links from Instapundit and lots of other high-traffic blogs). If that doesn't stop the IRS in its tracks, you'll get offers of pro-bono legal assistance and contributions from hundreds of people to defray your expenses.
We're playing under new rules these days, even if the government doesn't yet realize it. So don't be afraid. It's the government's turn to be afraid.
I just hit your tip jar, and I encourage everyone who reads this post to do the same. Thanks for having the courage to stand up to the BULLY IRS. You have my full support for calling Geithner out on the bloodsucking tax cheat he is. I will join you at the tea party barricades this April 15. These snot nosed unskilled bureaucrats will be mopping our floors one day soon and you have done more than your part already. Now keep your chin up and your wits about you. If the IRS really does try to hurt you, you will always be able to take solace in the fact that you did the right thing.
Please keep your readers posted on the progress of your case. I understand your feelings: In my own dispute with the IRS they lost a document I sent them via certified mail. I had the signature card to prove it was signed for at the IRS office, but it did not matter - the delay was charged to me in the form of additional interest and penalties.
Ben Bateman: This ain't a coincidence. Some IRS goon is playing games here.
I would strongly suggest you hire a professional camera crew and a lawyer.
The SCOTUS has found that you have a right to record any and all interaction with government employees.
Copy everything ... and expect these goons to try to lose anything you send them that hurts them.
Get every last encounter with them on camera or tape, and make sure they know that anything they say will not only be scrutinized by lawyers, but may also end up on youtube.
From your post, you have received a proposed adjustment. As a retired IRS agent, I'm almost positive that what you have is a CP2000, which is the output of the automated matching program known as underreporter. A transcript of your account will therefore show that this started well before any link of you and the Treasury Secretary ever existed.
If someone with nefarious motives were to try this on their own, your account would show an examination indicator after your initial critique of Geithner hit the web, but this would also start with a letter explaining you were being examined and be followed up with a phone call to set an appointment date. After the examination of your records, you would receive a proposed adjustment.
In the automated system, a technician (not an auditor or an agent) reviewed a descrepancy between items reported by companies (such as W-2's, 1099's, 1098's) and amounts reported on your return. If the difference cannot be resolved from a review of your return, then a CP2000 is generated (automatically--after resolved items are eliminated) and sent. Pretty routine stuff and often does not result in a deficiency when all is said and done. It's not considered an audit as examination division is never involved. Again, it is GS 5,6, and 7's who are not very well versed in the IRC and who work via a manual which states what is acceptable and what is not.
If you have questions on what you need to provide to show the discrepancy, call the number on the CP 2000 and ask.
I've added this story here...
http://www.americac2c.org/forum/categories/main-forum/listForCategory
And here....
http://www.secureourdream.com/forums/forumdisplay.php?f=20
So now you've joined the ranks of 'our Joe', Rush, and the others that have had the the 'you know whats' to ask a question, make a comment, or advertise something that makes a strong statement.
God Bless you Michael, stay strong and keep speaking out!!
I copied part of Woody's post over at my place, with all the links. It isn't much, but maybe it'll help.