Meet Your IRS Auditor – The Computer

IRS Audit SelectedWith all the news about the Government gathering information on us through the NSA, FBI, CIA, etc., is it any wonder that the IRS is using computers to audit your tax return.  In the past, IRS has “scored” your tax return based on a magical statistical formula to see what is the probability of getting money from you.  They still do that.

But now, in case you haven’t noticed, IRS forms are asking more questions that could be audit triggers.    When you claim vehicle expense for your business – “Do you have evidence to support your deduction?” “If “yes,” is the evidence written?”  What do think happens if you answer NO to these questions.   And how about “Did you make any payments in 2012 that would require you to file Form(s) 1099?” “If “Yes,” did you or will you file required Forms 1099?” Thanks for asking.

And then there is the program that matches W-2s and Forms 1099 to what is reported on your tax return.  And the more detailed reporting of security and stock sales.  And the list goes on.

In the last several years, we have seen a significant increase in the number of computer generated notices that our clients have received.  I have had clients bring in a stack of unopened IRS notices because they just didn’t want to know what was inside.  Not a good idea.  Even if you don’t open the envelopes, you are still responsible for the contents.  And there might be a time clock running which, if missed, could cost you a bundle.

Then Congress, in its infinite wisdom, has made your tax preparer responsible for YOUR tax return and could be penalized for deductions not properly documented.  Do you think that might that limit what you can deduct if you don’t have proper records.  (More on this later.)

If the IRS Computer sent you a notice today, how easy would it be to “send in” your documents to support the questioned deductions?  It could be extremely difficult and cumbersome.  Unless you have a good system.

Shameless plug – we recommend you take a look at for a simple, online system for people who hate accounting and taxes.  It could make your life much easier when you get the “Greetings” from the IRS.


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