Have Tax Questions? Ask a Tax Expert for Answers ASAP
IRS TAX EXAMINATION BY MAIL...I just received that letter from the IRS requesting information about unreimbursed expenses on my 2008 return of which I have no receipts but can probably provide some sort of documents. What will they accept and leave me alone based on the following:
1 - The company I work for does not reimburse for expenses.
2 - I do travel between offices (2 hour drive round trip).
3 - Attend local trade events/conventions.
4 - Work on projects at home.
5 - Participate in scheduled conference calls from home.
6 - Available for consultations 24/7.
The IRS has set of requirements which are acceptable documents to support deductions. They likely will not accept your arguments without supporting documents. You would need to be very prepared.
For instance - if you claimed mileage deductions for travel expenses - see the IRS Publication 463 for record keeping requirements http://www.irs.gov/publications/p463/ch06.html#d0e7460 - The information includes: Date vehicle placed in service, mileage (total, business, commuting, and other personal mileage), use of other vehicles, after work use of vehicle, and the most important two: having evidence to support the deduction, and having that evidence in writing.The IRS agent expects to see your written mileage log - http://www.irs.gov/publications/p463/11081l08.html AND some additional proof of the travel being claimed - work schedule, copies of letters, Email, and phone records referencing said travel.
As you attended local trade events/conventions - you might need your registration, advertisements of the event, etc
If you claimed home-office - you need to verify requirements in the IRS publication 587 Business Use of Your Home - http://www.irs.gov/pub/irs-pdf/p587.pdf
You may also need to review IRS publication 552, Record keeping for Individuals - http://www.irs.gov/pub/irs-pdf/p552.pdf - which kind of record is expected for your deductions.
If you do not have 100% of your records - that might be acceptable, but if you have no records at all - your deductions will likely be rejected.
Please be aware that just providing receipts and other information might be not enough. The IRS audit agent is trained to ask probing questions - unrelated to your return - to find reasons why your deductions should be rejected.
That would be very beneficial to have a local CPA or Enroll Agent - who knows what the law is and how to argue your position - to represent you. Such person will evaluate your documentations and would point on soft positions - so you would have time to prepare better.
Forgive me for not accepting your answer sooner..I tried to accept on 7/24 but the system was too busy to process.
Obviously I need to get professional help with this situation, can you give me an idea of how much they would charge?
the IRS representation may cost between $50 and $100 per hour if you hire a local CPA or Enroll Agent and up to $250 per hour for tax attorney.
Before signing any agreement you may ask for first free consultation and get an evaluation of your case.