Have a Tax Question? Ask a Tax Expert
First, stick to your guns that you were trying to err on the conservative side, by reporting income that others might try to hide.
Point out to the auditor that IRS now requires even bartering income to be reported ... YOU hd no choice but to rely on your client's information
Frivolous returns are returns that they to report less income than was earned, not more.
Point out that yu provided no information to the bank and had no knowledge that thius was anything other than, what you do for a living, preparation fo a tax return
sorry for the typos (OF) a tax return
Cash transactions don't have paper trails
And for a client to come forth and report cash receipts is, in your opinion, cmmendable
If you can produce anything written, receipts, emails, letters from the client that would be excellent documentation
And finally, having an engagement letter on file that indemnifies you from any liability because you must rely on information from the client ... that you have sent to the client, in your files would also be helpful
Note that in this documentation from IRS regarding frivolous tax arguments, its is OMISSIONS of income or CREATINV deductions that are being looked for, not EXTRA income:
"When the IRS later matches the payment records from employers, banks, brokerages, etc., and finds the omission, it notifies the taxpayer about the proposed additional tax, plus interest and any applicable penalty" ... from: http://www.irs.gov/uac/Tax-Return-Errors-and-Frivolous-Tax-Arguments
Hope this helps
I sill don't see you coming into the chat .... In a few minutes I'll move us to the "Question and Answer" mode ... maybe that will help ( We can still continue a dialogue there, just not in real time as we can here)
Sorry this chat thing is new for me. I've used Just Answer before but only in the "Question and Answer" mode.
not sure what it looks like from your side, but bsure to use your scroll bar to look back up through what I've typed
Give a minute. I am reading the publication you sent me
What about the expenses?. He also informed me about some expenses that were "cash" expenses. Do I have the same argument?
... that he provided the info, yes, but it's fake expenses that fall more in line with the idea of a frivolous argument
What's interesting is that the expenses would NOT help build the case for a loan ... so there might be more validity to the expenses?
Yeah, I agree, but in his case he wanted to prove just the gross income not the net income.
Most loan underwriters want both (ability to pay)
IS the business one that typically HAS a lot of cash transactions? ... THAT would help
a TYPE of business that would normaly have a lot of cash...
yes. he is a used car dealer with a lot of buy-here-pay-here deals and lots of people coming with their tax refunds to buy used cars.
definitely want to write that one down somewhere
the fact tat these guys don't have the best rep for telling the truth ..........
I think you just have to hang your hat on, your understanding that this is a cash business,and that you never created or advised any of the income or expenses
Well, wish me luck. Tomorrow I have meeting with the auditor.Definitely your insights helped me a lot.I have to confess that I was a little scared.But thank you a lot
be open, cooperative and I'm sure you'll be fine
OK. is this conversation saved somewhere that I can refer later if I need?
you have some options there .... copy and paste to a word document ... save this site as a bookmark (Favorite place... all the links will stay active) or you can file-print from your browser
the links will stay active as well, so just bookmarking this page, works well
Good luck .. and et me know how it goes and if I can help further
If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.
HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.
(You should als just be able to "save and exit," and it'll stay with your account
Can I help you with anything else this evening?
ok gotta go, but I'll be her if you want to check back in