Audits on Police deductions.

[JON]

Minnesota

The two most notorious "office audits"- green house Excelsior Blvd-across from Methodist Hospital-IRS closed that one down and the Stillwater, MN former IRS agent who determined deductions based on what he told clients the IRS would accept. He did a little time and had a following that got interviewed embarrased and penalized. Part of his followign were car salesmen-both of these were early 80's.

[Bees Knees]

They should audit 100% of his returns.

I remember something similar in our area way back when a husband and wife business could have one of the spouses treated as an employee, and the earnings were not subject to FICA. I think this was in the early 80’s. If you do that today, the earnings are not subject to FUTA but they are FICA taxable.

Well back then, just about every self employed person would try to treat their spouse as an employee so that you could cut your SE tax in half. Of course the rules were that the spouse be a bona fide employee; actually perform work; receive a paycheck; and be issued a W-2.

We had a tax preparer in our area that would just simply allocate half the income to the spouse and claim that personal expenses out of the checking account were considered half payments to the spouse since spouses are equally liable for their debts.

When one of his client’s got audited, the client told me that the auditor specifically asked if the tax preparer told him to do it that way. I think most of his client’s eventually were audited over the issue.

[dmj4]

Finally, an audit of one of the tax preparers in my area that has been taking meals and mileage for police and firefighters, while they are on duty and driving the patrol cars, has happened. I have never been happy about an audit before. I am not happy that the TP got audited but I must admit that I am glad the preparer got caught. This preparer has been questioned many times about whether these deduction are allowed and this preparer continues to take them.

We have had discussions about this practice in the past. Some of us have spent a great deal of time explaining to police and firefighters why they can not take these deductions only to lose those clients to the greed, anyway.

The person who got audited said that the IRS told them they were looking at the preparer. The person audited called me because I did his taxes before he went to this person. He was told by all of the local police officers that he should go to this person due to the huge refunds and promise that they would pay half the tax if he got audited. Well, needless to say, nobody paid half of what he owed!

He said the IRS is going to audit many of that preparer's returns. At least 20% to start.