Bad Audit Today

[Snaggletooth]

with the Tennessee Dept of Labor. Wants to reclassify EVERYONE as an employee, no matter what. Auditor showed up two hours early and was in the process of terrifying my client's bookkeeper, such that client was already in conciliatory mode when I arrived.

When I came in, started immediately to tell me how many "tests" were failed in the independent contractor determination. When I told her how many of these "tests" were passed for some of these, she couldn't handle it.

"I detect a tone of confrontation in your voice, and I'm tempted to go all the way back to the statutory limit with your customer, and there won't be a thing that he can do about it." "Maybe you don't know it, but there is a more-likely-than-not requirement that penalizes preparers nowadays." The bookkeeper ran out of the room to get the boss, and the boss beckoned me out of the room and intentionally sidetracked me onto other matters, and asked me to let the auditor wrap up things unhindered.

I respected his wishes, but he will have to find another preparer henceforward. He had otherwise been an excellent customer, and is really quite an intelligent and kind-hearted man.

By contrast, I went through two audits earlier with the state of Tennessee, and had very excellent, and fair-minded discourse with the auditors -- lots of give-and-take.

Is there an effective way to deal with auditors such as these? They shouldn't have the power of God as they imply.

[Jiggers]

Auditor arrived early?

[QUOTE=Snaggletooth;62610]with the Tennessee Dept of Labor. Auditor showed up two hours early and was in the process of terrifying my client's bookkeeper, such that client was already in conciliatory mode when I arrived.
QUOTE]

I have a problem with an auditor showing up 2 hours early and intimidating my client.

Taxpayers are allowed representation in state and federal matters.

I would have asked the auditor to start all over and to review each and every person that was being reclassified as an employee.

My state assumes everyone is an employee for state purposes, but not for IRS purposes. Just because the state reclassifies them as employees doesn't mean that the IRS will.

It is up to the employer to prove the "non-employee" status.

[Nashville]

20 criteria

Can anyone provide a link to the old "20 criteria guidelines" used by the IRS a few years back whereby they determined whether someone was an employee or independent contractor?

IRS has discontinued reference to these 20 criteria several years back. They went through 2-3 years where they reclassified EVERYONE as an employee no matter what, even in the face of court ruling precedent. They abandoned the 20 criteria when the courts started finding the taxpayers were qualifying as independent contractors under some of the criteria. I don't think they ever admitted this was the reason, they just simply "updated their audit manual" but it is strangely coincidental.

Even though they don't use the 20 criteria any more, these still are widely used and discussed by others in the tax arena in this ongoing struggle of independent contractors vs. employees.

[MAMalody]

They don't use the words "20 Factor Test", yet they are located in Section 2 of Pub 15A.

Mike

[sea-tax]

Snagg I am not sure what you can do. If it were me I would get permission from client to talk to the Auditors Manager. It seems to me that you have a lone wolfe auditor. I would explain to the client that he may have nothing to loose. But I think you need to use your best judgement here.

[Nashville]

Snagg Reincarnated

Snagg I am not sure what you can do. If it were me I would get permission from client to talk to the Auditors Manager. It seems to me that you have a lone wolfe auditor. I would explain to the client that he may have nothing to loose. But I think you need to use your best judgement here.

Hi Sea-Tax - good to hear from you. It's been awhile. This is Snag, reincarnated on another computer as Nashville. TMI's security requires a different handle for a different PC (and justifiably so).

Sea-Tax, there are two problems. One is the auditor, the other is the client. The client essentially pulled me out of representation by his actions. The bottom line here is that he can no longer be my client. If he wanted to capitulate to this auditor, he should never have asked me to represent him.

The other problem is the auditor, which by all rights is no longer my concern. But I will run into her again with another client, most likely, and from whence arises my question about how to effectively deal with this. And I understand that the burden of defense is on the client. The one consultant being reclassified is a very blatant miscarriage, the details of which I won't burden the post. Total Revenue to the state of TN is $189, so money is not really the issue anyway. She also wants to reclassify a college student who received a 1099 for $750 for painting the office.

If I may prevail on your time enough to paint a picture - the auditor bragged about a recent audit where an auto dealership had issued over 500 1099s, and she had reclassified every single one of these as an employee. Possible that most of them really should be? Absolutely. Possible that ALL of them really should be? Quite a stretch.

Thanks for these responses. Going to the supervisor is normally a good suggestion, but I know him, and he is one of the reasons she is as bad as she is.

[Jiggers]

Auditor's improper disclosure?

[QUOTE=Nashville;62630]
If I may prevail on your time enough to paint a picture - the auditor bragged about a recent audit where an auto dealership had issued over 500 1099s, and she had reclassified every single one of these as an employee. Possible that most of them really should be? Absolutely. Possible that ALL of them really should be? Quite a stretch.
QUOTE]

Was she giving an improper disclosure of confidential information?

I can't imagine an auto dealership giving 500 1099's.

[joanmcq]

Off topic, but Snag/Nashville I sign in at work and at home office with the same handle. totally different computers.

[Jiggers]

So do I

Off topic, but Snag/Nashville I sign in at work and at home office with the same handle. totally different computers.

I also sign in on two different computers.

Office computer and a laptop at home.

Same Jiggers.

[JoshinNC]

same here

I also sign in on two different computers.

Office computer and a laptop at home.

Same Jiggers.

home and office

[JohnH]

Same here. I alternate between 2 different computers at the office, plus one at home, and two different laptops from time to time. I use the same sign-in on all of them.

[Snaggletooth]

Recent Changes

At one time I could do this as well. About a year ago I asked to have my signon changed to some other handle, and between then and now they were in the process of making improvements. I don't think the new features tampered with Jiggers or anyone else who had already been registered on a multiplicity of computers.

Not sure of all the reasons, but I would think with some of the rash of rude posts, advertising, etc. they would have to resort to a 1:1 mapping before they could block the offenders without also blocking the innocent. I'm not enough of an I.T. guy to know.

[JohnH]

For what it's worth, this post is form a different computer than my previous post.
I didn't do anything differently to sign on here.

[Lion]

Me too

I've signed on from computers that belong to others, in their homes or offices. As long as I enter Lion and my password, I get right in.

[BHoffman]

We should vote:

Snaggleville or Nashtooth?