Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
How are you today?
Do you still have access to bank statements, and credit card statements for the period in question? Were a multitude of the receipts for cash purchases?
You don't have to have receipts, you just have to be able to prove expenses. You can prove expenses through the use of other documents such as bank statements and credit card statements. You can also use other means, such as logbooks and other reasonable measures
For example, if you lost your meal receipts but you keep a logbook of your business meals & entertainment, you could use the information in the log to reconstruct a reasonable basis for an expense to deduct
I recommend the book, IRS Problem Solver by Dan Pilla for this situation. The book has good information on what to do when you don't have receipts to prove expenses
Are you familiar with irs audits
Yes, I am
I am a realtor...had income of 66,000 in 2010 but had expenses of 30,000 and cannot show even half of it. I am concerned that auditor will turn it over to fraud division. How worried should I be
The worst thing that would happen, is they disallow your expenses and assess tax on the portion that you cannot prove
I highly doubt they will turn you over to fraud for that little of an amount - $30,000 of taxes is going to get them less than $10,000
Criminal fraud cases take significant resources. Worst case scenario in your case I would think would be to disallow all the expenses you cannot prove, and then charge you the 75% civil fraud penalty - but I still doubt they will charge that penalty
OK...this makes me feel a little better. Should I have a rep with me in the audit?
Losing your receipts is not fraud; Making receipts up is
I would ALWAYS take a rep with you to an IRS audit - this is true even if you are a professional that deals with this sort of thing every day.
You're too emotionally invested in the situation. YOu need someone there with a level head that knows what the IRS can and cannot do
The IRS can lie to you - it's not against the law. They can bluff. An expert knows when to call the bluff and how to get you out of the audit with the least amount of tax debt due
do you know of a reasonable service that I could use in Walnut Creek, CA?
I would start with your local CPAs.
I can't recommend a particular one, but I would go with a local CPA that is practicing in your town. I would not go with a tax negotiation service or a big chain
Unless of course you had HR Block prepare your return -sometimes they will give you a free EA (enrolled agent) to take to the audit
If you play your cards right, you could even have the audit done completely by correspondence so that you never have to go talk to the auditor
This calms me down a little...thanks...what if I have another question with you...how do I get you
All that is in the book IRS Problem Solver by Dan Pilla
Well, I am in Tennessee and I cannot provide professional services for customers of JustAnswer
All I can do is provide general information, unfortunately.
Is there anything else I can assist you with today?
I will get that book...thanks
I would definitely read the book IRS Problem Solver - it will make you feel so much better
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