Audtior willnot allow mileage log

[Barb]

Has anyone ever had an auditor that will not allow a mileage log because it was not done at the actual time? My client has all his Invoices and calculates the mileage to each location and uses excel to record the miles. He does not put down the actual start & stop vehicle miles from the odometer. Now the Auditor is rejecting ALL the mileage. Any ideas what we can do?

Besides this, this guy is almost impossible to work with. Can I request a new auditor and how do I do that?

At my wits ends on this case. Thanks for any help.

Barb, EA

[ChEAr$]

wait

Has anyone ever had an auditor that will not allow a mileage log because it was not done at the actual time? My client has all his Invoices and calculates the mileage to each location and uses excel to record the miles. He does not put down the actual start & stop vehicle miles from the odometer. Now the Auditor is rejecting ALL the mileage. Any ideas what we can do?

Besides this, this guy is almost impossible to work with. Can I request a new auditor and how do I do that?

At my wits ends on this case. Thanks for any help.

Barb, EA

till the audit is finished, but before wrapped up, request meeting with his manager to resolve this issue.

And if that manager backs up the auditor, you can always appeal.

[solomon]

Auditor is relying upon §1.274-5T(c)(ii)(A)

(ii) Account book, diary, etc. An account book, diary, log, statement of expense, trip sheet, or similar record must be prepared or maintained in such manner that each recording of an element of an expenditure or use is made at or near the time of the expenditure or use.

(A) Made at or near the time of the expenditure or use. For purposes of this section, the phrase made at or near the time of the expenditure or use means the element of an expenditure or use are recorded at a time when, in relation to the use or making of an expenditure, the taxpayer has full present knowledge of each element of the expenditure or use, such as the amount, time, place, and business purpose of the expenditure and business relationship. An expense account statement which is a transcription of an account book, diary, log, or similar record prepared or maintained in accordance with the provisions of this paragraph (c)(2)(ii) shall be considered a record prepared or maintained in the manner prescribed in the preceding sentence if such expense account statement is submitted by an employee to his employer or by an independent contractor to his client or customer in the regular course of good business practice. For example, a log maintained on a weekly basis, which accounts for use during the week, shall be considered a record made at or near the time of such use.

[BOB W]

The XCell log could of been done contemporaniously and in todays world it would not be uncommon. Auditors are looking for hand written documents AND that may be outdated auditing proceedures.

[Barb]

Mileage record

I did not see anywhere that it states and actual start & stop vehicle miles must be recorded. Is this auditor just being a butt about this whole thing?

[solomon]

I did not see anywhere that it states and actual start & stop vehicle miles must be recorded. Is this auditor just being a butt about this whole thing?

I have seen using Mapquest to verify mileage satisfied an auditor - don't know about this one.

[Bees Knees]

The auditor knows full well that the mileage log does not have to be hand written, nor does it need start and stop mileage.

Call his bluff and stick to your position.

[Nashville]

Contemporaneous

Barb, the key word is contemporaneous. There is a general feeling among some of these folks that if the log is not kept contemporaneously, then it is fabricated.

Not so. An appointment book, and evidence that the appointments were done at the customer's premises, would indicate ample evidence. My tax practice mileage log consists of a log of my serial-numbered invoices, and the mileage attached. Then I add my CPE seminar attendance mileage. Hard to defeat the correlation between mileage and revenue.

You should win this upon appeal. Let the auditor have his say, then request an audience with his supervisor. Auditor is trying to get a gold star instead of applying the tax code and common sense.

[AuditorTurnedGood]

As a former auditor

the worst thing you can do now is "Do what you need to do with his appointment book with different pens" - this is the best way to get in an even worse position with the auditor. Mileage logs that magically appeared during the audit were a ticket to maximum penalties. Which kind of shoots in the foot the "recorded then transcribed" position. I assume the client the the milage calc at the end of the year?

In any event, how much is the proposed increase in tax? Rolling over might be cheaper for the client in the long run than appeals.

[tacks]

I'm interested in how this turns out. I've know agents to accept log books. And this agent sounds like a real monster. (Unless there's some other issue here which we're not looking at)

If it were me i'd be tempted to fight it simply for the sake of principal alone.

Good luck, Barb.

[AuditorTurnedGood]

Btw

I'm not taking the side of the government here. And as the for auditor, I agree with tacks, he sounds like a nut on a power trip. I'm sure I did that once or twice (when they give you a job and the ability to sign your own legally binding subpeonas, it gets a little intoxicating). If you decide to fight it, I wish you the best of luck!

ATG

[taxmandan]

Don't ask for a new auditor, that will not help. Go to Appeals and get the mileage accepted there. Don't fabricate a new "old" logbook with different pens, major penalties if you then claim it was contemporaneous.

FWIW, our state auditors are demanding contemperaneous logbooks with odometer readings for each entry and are being upheld on appeal by the court. So that's something you have to consider also, the state will be along shortly and what will their attitude be like?

[Jiggers]

Vehicle mileage

Don't ask for a new auditor, that will not help. Go to Appeals and get the mileage accepted there. Don't fabricate a new "old" logbook with different pens, major penalties if you then claim it was contemporaneous.

FWIW, our state auditors are demanding contemperaneous logbooks with odometer readings for each entry and are being upheld on appeal by the court. So that's something you have to consider also, the state will be along shortly and what will their attitude be like?

In keeping a vehicle mileage log, is it necessary to show the odometer start/end reading or can you use the trip meter?

The reason is that my odometer does not show tenths of a mile (0.10). It shows only miles. A trip to the post office, round trip, is .8 miles. If the odometer just changed, it won't change to the next mile by the time I get back. So I show 0 miles?

Also, sometimes I forget to write down the start/end readings. But it is always 0.8 miles to the post office, 4.8 miles to the bank, .7 miles to a specific client. If I log where I went, can I just use the standard miles on my log?

[tacks]

wait till the audit is finished, but before wrapped up, request meeting with his manager to resolve this issue.

And if that manager backs up the auditor, you can always appeal.

That, is more or less, how i'd go about it.

But i might first call the manager to discuss the issue before meeting with him. (I'm probably being naive to think that the manager might give you some relief w/out a meeting.)

I understand that they also started a 'fast track' program which is supposed to be quicker than the appeals process. I'm not sure if anyone has any thoughts on this program. (or even if the program still exists)

Good luck, Barb.

[AuditorTurnedGood]

In keeping a vehicle mileage log, is it necessary to show the odometer start/end reading or can you use the trip meter?

I have read a few court cases from the 08 and 09 sessions that point to needing the beginning and ending mileage at, if no other time, the beginning and end of the year. The Court is hammering home the idea that if you don't know how many total miles you drove in the year, it's going to be impossible to determine business use percentage.

As for the no 1/10's of a mile, IMHO I would say that even the IRS has to accept the 5/4 up/down rounding - we already to it on the tax return for cents, so I would imagine doing it for mileage would be ok. No backup on this, just logic, which can be risky.

ATG