I thought the IRS was not auditing 2006 Tele Tax Refund Credits

[BulldogTom]

Suprise, the company I work for in the day gets to prove the deduction. Luckily I did not go with the conventional wisdom of our outside CPA's and I have all the documentation in place and ready to fight the audit. Just a matter of copying and mailing the documentation in. No need to pay the CPA to tell me to copy all the documentation and let them charge me for it.

When this credit came out, I was told that in general the IRS would not be questioning the returns. I wonder what changed? Have any of you had your corporate clients audited on this credit?

Tom

Lodi, CA

[joanmcq]

I heard that they were going to scrutinize payments that weren't the standard. But just a rumor, not set in stone. Since it is a refundable credit, I can't imagine them not scrutinizing some of them.

[kcjenkins]

I think it was just the 'automatic' $30 and $40 ones that they were not going to audit. Some of the business ones will be, and you just 'got lucky'. Glad you kept all the documentation handy, that should make it a breeze.

[David1980]

Yeah, as far as I know it was just the $30-$60 credit that was going to be basically not questioned. The other method on the other hand I seem to recall the IRS even saying they had a lot of abuse and were going to audit a lot of them.

I know personally I'd have people come in with their phone bills and want to write off the whole phone bill for 3 years. Or they had other taxes paid in addition to the federal excise tax. Or a variety of other situations where they thought they could include some amount that wasn't the right amount. I expect the IRS is going to audit a ton of these things and probably get a lot of money doing so.

[bstaxes]

The only person I did the actual method was myself with 3 landlines and 2 cell phones. Thankfully the cell phones were the same amount each month and I do have every bill for my land lines. I guess I a keeper (of junk or odd things) but it will be to my advantage if I am audited. I have my spread sheet for each by month and the bills. I guess I would send copies of the bills because it took me a loooong time to make the spread sheet and IRS can do the same.

[jainen]

>>I was told that in general the IRS would not be questioning the returns<<

I think you are right. Advise your client that the supposed audit letter is a scam to steal proprietary information, and they should ignore it.

[BulldogTom]

>>I was told that in general the IRS would not be questioning the returns<<

I think you are right. Advise your client that the supposed audit letter is a scam to steal proprietary information, and they should ignore it.

The client is my employer on my day job, so I will not be so unconcerned as if it were "just any client".

The person that told me this is the tax preparer for the corporation's outside CPA firm that reviews my books and prepares the corp tax returns. In fact, I did all the work on the telephone tax refund (full disclosure - I had my staff pull all the phone bills and tabulate the taxes - but I managed the work). Our CPA thought it would not be worth our time to pay him to do the work. We got a 16K credit. I am sure he would have billed more than that to do the work.

You are not up to your usual standards Jainen. Not enough sarcasm in your post.

Tom

Lodi, CA

[joanmcq]

The only one I did the actual on was myself too. 2 landlines and one cell, and I have all the bills. gave me an extra $100. I gave the form to one client that brought in all of her cell phone bills and said she could figure it out herself if she wanted. was about $2 more than the $30 so no go. A lot of early returns were being audited because of the refundable nature...the whole phone bill bit, and people requesting thousands of dollars. A bit odder acutally for a large biz to be audited, since businesses had to use the actual if I am not mistaken.

[jainen]

>>A bit odder actually for a large biz to be audited<<

Maybe IRS is interested in whether businesses are treating the refund correctly, i.e., as TAXABLE income.