IRS - Again!

Hello again,

 

So, the conversation really got off topic yesterday. Unfortunately, I never really got an answer to my question. I don't want to discuss why people like or dislike the IRS , agree or disagree with IRS practices, just if you or anybody you know that has been targeted. So, has anyboby been targeted by the IRS and believed it was because of their car(s)?

 

 

 

Thanks!

 

 

Usually when a topic gets locked you leave it alone and move on...

The IRS does not target based on your cars. The audit was more likely based on the high level of income/deductions shown on their return. And yes, I've been audited and have been on many audits over the years.

 

Hence TaxLine...

At the very least this is an "offtopic" issue

I would assume buying high end cars could potentially raise a red flag with the IRS.......if reported by someone. I was audited several years ago and at the end of the audit the IRS agent told me the reason I was audited was because my real estate purchases raised a red flag with them. They are constantly looking out for undeclared cash earnings......taxpayers laundering cash. I agree this is very off topic and does not belong in this section.

The IRS has no idea what type of cars your friend owns, and they dont give a shit.... Your friend is a fool.

 

The IRS knows TWO THINGS aboout you and TWO THINGS ONLY: The information you provide them regarding your INCOME (in the form of a 1040) and the information others provide them regarding your INCOME (in the form of a 1099 or W2, etc.). NEITHER have any information about what kind of car you drive.

 

Audits are determined in two fashions:

 

1. Randomly. A percentage -it used to be about .75% (thats three quarters of one percent for those of you in Rio Linda) but it fluctuates based on the number of "red Flag" audits below which have priority - of all returns are audited just because they "lost the audit lottery" as tax experts refer to it... Literally, they pulled your Taxpayer ID Number out of a hat (a computerized hat, but you get the idea).

 

2. "Red flags". (this nails another 3/4 of 1% of returns- but it can go higher if they have an unusually high number of Red Flag returns and simply reduce the number of "random audits") There are two types of Red flags- Returns that have an unusually HIGH number of traditionally "suspect" deductions with respect to the income, and returns which use "Hot Issue" deductions as the IRS refers to them.... The later are deductions that the IRS has determined to "pay attention to" for a particular tax period just to study if they are being abused- Again... Almost a random drawing.

 

In total, less than 2% of all returns are audited.

 

A third filter that effects both of the above is income.... The lower the income the less likely the audit... the reasons for this are obvious.... If somebody making 20 grand a year underpaid his taxes by 10%, BIG fcuking DEAL.... Its like 10 bucks.... Its not worth the cost of collecting it....

 

If, on the other hand, somebody making several million a year underpays his taxes by just 1%, it could work out to be hundreds of thousands of dollars of unpaid tax.

 

So assuming people who drive Lamborghinis are in the highest tax brackets, they are also the people who are most likely to be audited, And that group is more likely to be audited regardless of whether they drive a Lamborghini or a 20 year old Yugo.

 

 

Like every other agency, the IRS has a yearly budget. And a portion of that budget goes to conducting Audits. So they can do X number of audits PER tax period. Thats it. Once theyve done them all, unless there is OBVIOUS CRIMINAL LIABILITY (you didnt file a return, you made 10 million bucks and paid ZERO tax, etc, which they WILL GO AFTER YOU FOR!) THEY ARE DONE.... The way to avoid audits is simple. 1. DONT DO ANYTHING STUPID OR ILLEGAL! 2. DONT HAVE A LOT OF RED FLAGS (an accountant will have software thats EXACTLY LIKE THE IRS USES that will TELL HIM EXACTLY what your "Audit Points" are... The lower the points, the more you fly below the radar. and 3. TO AVOID THE AUDIT LOTTERY- FILE FOR AN EXTENSION!!!! Pay your Taxes in OCTOBER instead of April! By October, the Audit budget is DRAINED... You take the "Random" thing out of the equation almost completely....

 

 

 

Now... Learn the forum headings and the proper place to post topics.... And dont restart closed threads.