Audit by Mail of Schedule C

[OtisMozzetti]

Examination of Schedule C was requested with everything due within 30 days from date on letter to contact person named Tax Examiner.

It seems to me that it is 2 to 5 times more time-consuming and expensive to nail down everything completely than to show up with well-organized files, substantiation, and summaries.

Is this what happens when the IRS budget isn't adequate? Will the procedure prove to be counterproductive in the long run for the IRS revenue objectives?

How can tax professionals best operate under such a regime? For one thing, the fax machine at Tax Examiner almost never answers.

[WhiteOleander]

I had a client who had a mail audit this past summer of 2106 items. We didn't try to do the fax at all. We just sent by mail "certified return receipt". I told my client to get ready to pay some money because they could not substantiate(sp?) alot of their deductions. After about 6 weeks, they received a "No Change" letter. So, I have no idea what happened. Maybe a new examiner, or maybe no one ever looked at the info. Just rubber stamped it through.

[Koss]

Audit

You can always ask to convert the examination into a face-to-face office audit...

It is unlikely that they will say no.

BMK

[Snaggletooth]

Stop Them

...if you can. This hasn't happened to me yet, and I don't know what I'll do when it does. This is a bad trend, and is the ultimate in a long list of audit procedures which keeps them in the office instead of getting their butts out in the field and catching tax cheaters.

[Nashville]

Hierarchy of Audit Venues

You can always ask to convert the examination into a face-to-face office audit...It is unlikely that they will say no.

Yes, but does not the client run the risk of such an audit being more aggressive?

I've been taught the severity of engagements are as follows (from best to worst):
1) Computer Audit (mail)
2) Audit in IRS facility
3) Audit at Client's facility
4) Visit by US Treasury officers

Does anyone feel differently?

[ChEAr$]

Yes, but does not the client run the risk of such an audit being more aggressive?

I've been taught the severity of engagements are as follows (from best to worst):
1) Computer Audit (mail)
2) Audit in IRS facility
3) Audit at Client's facility
4) Visit by US Treasury officers

Does anyone feel differently?

I don't think it makes any difference. IRS in it's "finite wisdom" was just trying to makes things simple, for itself that is.

Taxpayer has the right to request office audit.
And I would, too.

[S T]

Mail In

I have had "good luck" with mail in on "so callled restricted audits"

Takes some time to gather the paperwork, and mail in, but I would have to do the same preparation work anyway - and the audits have gone smoothly - conversation with the auditor via phone to discuss and finalize - I actually spent less time than if you added up the travel time to the IRS appt - the waiting for the appt - the 2 hours or more with the auditor - travel time back from the audit, and then waiting for the outcome. (prep work not considered)

Time Delays - but I have experienced those even with a one on one Office Audit.

I have now encountered several phone conferences on audits for State - those go smoothly and we always have more time to forward additonal documentation. Al seems to be less confrontational.

Maybe this is a good thing - as some people on the Govt side don't always have good people skills!

Final Outcome on the one or two I have encountered over the last 2 years has been Positive . If I have to encounter an Audit request, I would more than likley vote for the mail in. - I really don't like the audit at a Client's Facility. and have not had the pleasure of the US Treasury Officers audit (hope I never do)

Sandy

[Kram BergGold]

Mail audit - be thankful

Examinations by mail are the least intrusive, most likely to reuslt in a no change, least likley to expand to other years. Deal with it with a smile on your face. Again use the mail not a fax.

[joanmcq]

The only time I use a fax is if there are few documents, which for a sch C is rare. The auditor is labeled 'Tax examiner' because the audit isn't assigned to anyone until the docs arrive, unlike an office or field exam.

[OtisMozzetti]

Experience with the fax machine

Last week, I did manage to fax something (Form 2848) after quite a few tries. This week I tried to send the reply summary (11 pages) to the same fax number. Only after a few hours of trying about 52 times, and only after calling the phone number which rang 22 times per call on two different days, and then reached an announcement that "this is not a working number", did I decide to rely entirely upon the first-class certified mail (56 pages) which had already been sent. I plan to download the proof of delivery from the internet. I guess I could have called the listed phone number and could have asked if there might be another fax number available. At least I would have learned that they aren't receiving faxes.

[Koss]

IRS Failures

If you are really getting a "nonworking number" recording when calling the number that appears on an IRS examination notice...

I would seriously consider blacking out the client information and sending a copy of the notice to your congressional representative, your senator, and the media.

My guess is that you'd get a call from an IRS manager within a week or so.

But before sending the stuff out, I might create an electronic trail by making a digital audio recording of the calls that lead to a "nonworking number." The audio recording, if done right, can include the "touch tone" dialing, which can be used to confirm the number you dialed.

I'm really not kidding around. You might get some great media exposure and some new business. But if you don't create some evidence to support your claim that it is a nonworking number, and you send it out to the media and to your legislators, the number will magically start working about six days after you send the stuff out, after the media and your legislators call the IRS to ask about it. Then you'll have egg on your face.

FYI: It is not illegal to make audio recordings of your own phone calls.

To anyone who believes it is: Cite the statute or code. It doesn't exist. It's an urban legend.

If you install equipment in your home or office that automatically records all calls, you are probably breaking the law, because you are recording other people's calls, without their knowledge, such as calls placed by your spouse, or your 18-year old daughter, or your 18-year old daughter's boyfriend when he uses your phone.

But if you selectively record your own phone calls, you are not breaking the law. And in most states, you don't even have to disclose to the other party that you are recording the call.

If you think I'm wrong, educate me. Cite the statute or code.

BMK

[Gary2]

FYI: It is not illegal to make audio recordings of your own phone calls.

To anyone who believes it is: Cite the statute or code. It doesn't exist. It's an urban legend.
...
But if you selectively record your own phone calls, you are not breaking the law. And in most states, you don't even have to disclose to the other party that you are recording the call.

If you think I'm wrong, educate me. Cite the statute or code.

I'm not sure whether you mean recording just your side of the phone call, or recording both sides of a call you make or receive.

In any event, in MA, not only must you disclose it to the other party, but you need their permission. See

http://www.malegislature.gov/Laws/GeneralLaws/PartIV/TitleI/Chapter272/Section99

[Koss]

I'm not sure whether you mean recording just your side of the phone call, or recording both sides of a call you make or receive.

In any event, in MA, not only must you disclose it to the other party, but you need their permission. See
http://www.malegislature.gov/Laws/Ge...r272/Section99

While the Massachusetts statute appears to prohibit recording any phone calls without the permission of "all parties," a more careful reading leads me to a different conclusion.

The Massachusetts law prohibits secretly recording phone calls. To me, this means that if you want to record your own calls, you must disclose the fact that you are recording, but you do not need permission from the other party. If they don't like it, they can choose to end the call.

And most states recognize a periodic beep tone on the line as an adequate disclosure that the call is being recorded. I don't know if this is the case in Massachusetts.

Most call centers--whether you are calling about your cable TV or your credit card--record their calls. Some record all calls, and keep the digital recording for only a few days, while others record a random sample. The recordings are used primarily for training purposes. The fact that the call is recorded is clearly disclosed in a recording that you hear before you speak with a representative.

Disclosure is sufficient to comply with the Massachusetts law.

In many other states, if the party making the recording is also a party to the conversation, disclosure is not required. However, if other parties are unaware that the recording is taking place, then the recording cannot be used as evidence against them.

I'm not an attorney. But most of our laws can be understood by simply reading the text of the law. This is not so with respect to the Internal Revenue Code.



BMK

[FEDUKE404]

Upon further review....

You may wish to review this:

http://www.pimall.com/nais/n.recordlaw.html

Things could get particularly complicated in the twelve states that require all party consent.

"Two party or all party consent means that every party to the conversation must have knowledge and give consent to the recording."

As for statutes et al.....well, you'll have to check with a lawyer on that aspect.

FE

[Koss]

One Party vs. Two Party Consent

The website you cited has some interesting information.

The second sentence that appears on the website says:

What that means is a person can record their own telephone conversations without the knowledge or consent of the other party in those states that allow one party consent.

The site goes on to assert that 38 of the fifty states allow one party consent.

So this site confirms my assertion that in most states, it is not illegal to record your own telephone calls, even without consent of the other party.

Even in those state that require consent of all parties...

I suspect that common law and common sense tell us that a party has consented to the recording if they continue the call after the disclosure.

BMK