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I am unable to prove some unreimbursed employee expenses in…

I am unable to prove...
I am unable to prove some unreimbursed employee expenses in a NYS audit. Is it worth it to hire an audit defense company or should I just respond on my own?
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Answered in 1 minute by:
3/8/2018
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 4,789
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Hello. Thank you for choosing this Q&A service for assistance. My name is***** will be assisting you. I am prepping my response, which I will provide in the next thread(s).

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Ok, so you're being audited and you are unable to substantiate some unreimbursed employee expenses. How much are the expenses that you can't substantiate?

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Customer reply replied 5 months ago
Hi Angela. Thank you. I’m Darren. They asked for property taxes, employee expenses, and Misc exp

Hello Darren. They are auditing your Schedule A (Itemized Deductions). What is it that you cannot substantiate on the Schedule A?

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Customer reply replied 5 months ago
Out of $14801 in expenses I’m short about $3800. As long as they accept all my evidence.
Customer reply replied 5 months ago
Property taxes are fine. That’s another 14,000 or so.
Customer reply replied 5 months ago
I put everything together and scanned it and am ready to send it through their website. I even attached an “apology” letter of sorts blaming my ignorance and negligence.

I want to tell you something, taxing agencies, both state and federal does not accept ignorance of the tax law as an excuse. While the letter may or may not make a difference, i certainly wouldn't use the work negligence in the letter.

Still typing...

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Customer reply replied 5 months ago
Ok. Makes sense.

As to whether or not you should hire representation, that depends. How much is the representation going to cost you? Let's say that you can substantiate $14,000, so you are looking at almost $4,000 that they may deny. If they deny $4,000 in deductions, you will be taxed on that amount and it is quite possible that you will get hit with a penalty. If you do not have the substantiation to document the deductions, I am not really sure how much help the audit defense would be, unless, of course, they pull something out of their sleeve. Another thing, if you decide to deal with the matter yourself, don't volunteer any information/documentation, wait until they ask for it.

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In closing, my goal is to provide you with the best experience possible! Hopefully, the service that I have provided has earned a 5-star rating! Please remember to rate my service by selecting the 5 stars at the top of the screen before you leave today. Thank you in advance. If you require further assistance, use the reply box and let me know.

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To read up on your rights during the audit, refer to the following link.

https://www.tax.ny.gov/enforcement/criminal_enforcement/audit_rights.htm

--------------------------------

What to expect after you are selected for an audit:

https://www.tax.ny.gov/enforcement/criminal_enforcement/audit_expectations.htm

---------------------------------

Concluding the audit:

https://www.tax.ny.gov/enforcement/criminal_enforcement/audit_conclusion.htm

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Customer reply replied 5 months ago
between property taxes and business expenses they asked me to substantiate about $29,000. I cannot prove $4,000. I don’t know what the NYS rates are but I assume my requested small refund of $1512 will be severely reduced.
Customer reply replied 5 months ago
will the irs be contacting me in the future on the same issue? Ugh.
Customer reply replied 5 months ago
I really appreciate the advice. This has been incredibly stressful.

No problem. Glad that I can assist. Note that if deductions are denied, yes it will impact your refund. As far as having to deal with the IRS on the same issue, that is quite possible. SEE BELOW:

----------------------------

Privacy/confidentiality You have the right to know why we are requesting certain information, how we will use such information, and the consequences of your failure to submit the information. The Tax Law prohibits the disclosure of information obtained from a tax return, or during the course of an audit, to any unauthorized person. The Tax Law, however, does permit us to share your tax information with the Internal Revenue Service and other tax agencies, under defined standards of secrecy and reciprocity.

REFERENCE SOURCE:

https://www.tax.ny.gov/pdf/publications/income/pub130d.pdf

Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 4,789
Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Tax.appeal.168 and 87 other Tax Specialists are ready to help you
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Customer reply replied 5 months ago
I’m trying not to see an ulcer in my future. LolI’ll rate you 5. Thanks again.

Thank you for 5 star rating. I do appreciate it.

If you're going to handle the matter yourself, try to remain calm. I know that is easier said than done. Ok, unintentionally you overstated your deductions. The worse that could happen is what i mentioned in my previous response. Try not to make yourself sick over it. You are not the first to get audited for this matter, and you certainly won't be the last. I don't think your name is ***** ***** be put on a list for all the world to see. Take slow deep breaths, you'll be alright. Smile.

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Customer reply replied 5 months ago
Angela
Tax Accountant
Blossoming psychotherapistGreat advice. Will breathe. Will smile. :)

I wear those hats and a few others as well. Smile.

For future reference, remember to always err on the side of caution, rather than not.

Life happens, and when it does, it is seldom at a time of our choosing.

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Customer reply replied 5 months ago
Add philosopher...
Yes lesson learned. We have a receipt envelope now for EVERYTHING. Electronic records don’t cut it.
Have great evening!

Smile. You do the same. Thank you.

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