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Question

Hi,

My husband and I was mail audited by IRS for the year of 2006-2008. They were asking us to provide recipts for business expenses. We responsed the mail with receipts, but without any luck the IRS told us that there is no establishement in business expense. As a result, we owe back tax with interest about 10,000 dollars in total. Is there anything I can do to resolve the issue? Should I take the case to court? Any recommendation of tax relief lawer?
We are NJ residents. I work in PA & my husband works in NJ. We haven't find an accountant that is familar with state reciprical law, Any recommendation?

Thank you in advance.

Jenny

Submitted: 71 days and 5 hours ago.
Category: Tax
Value: $15
Status: CLOSED
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Optional Information

Country/State/Province of question: New Jersey 08520, USA

Already Tried:
I claimed that since my work place is non-profit organization, and I commute from NJ to PA everyday, so the commute is part of business expense. The letter from empolyer was sent to IRS, but the IRS did not recognize it as a business expense. We just got the registered mail today.

Posted by Merlo 71 days and 5 hours ago.

Info Request

Hello JJJ,

Unfortunately, commuting expenses to and from your job is never allowed as a tax deduction, regardless of who you work for or whether or not that is a non profit organization.

Can I ask what made you think that working for a non profit organization made this mileage deductible?

Were you paid a wage by this non profit organization or did you work there as a volunteer?

71 days and 5 hours ago.

Reply

my accountant from NY told me I can use my milage as a tax deducables. He told me regardlesss of who you work for can be deducted. I am just trying to justify it with the IRS with the fact that I work for a non-pro organization should weight more. Actually I am waged empolyee with a funding coming from government.

Posted by Merlo 71 days and 5 hours ago.

Answer

Hello again JJJ,

Unfortunately, the advice given by your accountant is totally incorrect. You may never deduct mileage to and from your workplace, regardless of who you work for, as long as you are a regular employee. And the fact that this was a non profit organization will hold no more weight than working for anyone else. For tax purposes you were still being paid as a regular employee, the same as you would have been paid working for anyone else. And it has nothing to do that the funding for your pay may come from the federal government. Even if you worked directly for the federal government, you cannot deduct your mileage to and from your work.

If you perform charity work for a non profit organization, (work which you volunteer your time for and receive no pay), then you may claim a mileage deduction as a charitable contribution for the miles you drove to the charity to perform your volunteer services. But as a paid employee, this does not qualify as charitable work.

If you feel that you would still like the advice or assistance of a tax professional in your area, my suggestion would be to contact an IRS enrolled agent. An enrolled agent is not actually a tax attorney, but they are licensed by the IRS to practice in tax court. The fees of an EA will be much more affordable than going to a tax attorney, and they are just as knowledgeable in the tax law.

You can find an EA in your area on the following website. Click on the link on the left hand side of the page to find an EA in your area.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you JJJ.



Posted by Merlo 71 days and 5 hours ago.

Answer

Hi JJJ

I just realized I left out the link I said I would give you. Here it is.

http://www.naea.org/MemberPortal/

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you JJJ.

71 days and 5 hours ago.

Reply

Thanks, I was wondering about the link, and there you posted. Just some more questions about EAs

Will EA work to reduce some of my back tax due, or will they only assist me in working out a payment plan?

Accepted Answer

Hello again JJJ,

An EA can certainly work with you in both situations. However, keep in mind that the only way the IRS would consider reducing the tax you owe is if you can prove that you are not financially able to pay this entire tax bill over the allowed collection period of 10 years.

You may be able to get some of the penalties reduced or waived, but the tax itself and the interest would not be reduced unless you can prove that it is not likely you would be able to pay this bill over a 10 year period of time.

But an EA would discuss those options with you, and he will be able to tell you whether or not he thinks you might qualify for a reduction in the amount you owe.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you JJJ.

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Expert: Merlo
Pos. Feedback: 99.8 %
Accepts: 
Answered: 9/12/2009

Accountant

25+ years tax consulting. Specializing in returns for US citizens living abroad

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