Back in mid 2009 I received a letter from the Internal Revenue Service that I was going to be audited for the year 2007. Getting a letter like this holds never a comforting feeling. Whether one has had a good or bad financial year in question that doesn't make much difference when you are staring down at a letter from the IRS. One of the first things that did go through my mind was that the paper used was not from recycled materials. How many letters does my Uncle Sam put out every day? Where does all of the garbage go? We waste so much in this world...
It looked as though they were looking for $67,000. There was some change, but let's just use some round figures.
I have been computer audited before, but never had a scheduled meeting with an agent. I pondered the letter for a few days, wondering what all will be involved in such an act. I thought of McVeigh and maybe that was the reason he blew up the building in Oklahoma. There is a great resource for legal books called Nolo Press where I got a few books, one of which was called "How to beat the IRS". It was time to dig in and begin the defense, so I ventured into the attic to rummage through some boxes and pulled out all the documents.
Let's go back a bit to April 2006. I called my accountant's office to make an appointment to put things together to file an extension. I do that every year. Primarily, just to piss off the IRS. If I owe them money, which being self employed that tends to happen, I want them to wait to get their grimy little hands on my moola. Now, don't get me wrong, I'm not at all against paying taxes. In fact, in today's economy it shows how much effort is needed to reconstruct our tax code, as this country is going down the toilet, pretty quick.
Anyway, I was told that my accountant retired. I really liked her. I knew that I pushed her to her limits, and things were always good. I could tell on her face when I was attempting a deduction that wasn't going to work. She kept me in check.
Now, it would be up to me. So, in 2006, I began using a popular tax software program. I read a lot. When one is in business for one's self it is good to read about tax issues, processes, codes, and the like. I even spent time at a few seminars for planning and strategies over the years. So, beginning to work with the software wasn't too difficult to navigate since I had the background knowledge for small business tax strategies.
I have subsequently done my taxes for 2006 forward. Oh, and I received a letter from the IRS. I know that when you are in business for yourself, and you do your own tax return, you are red flagged. So, it is vital that you have the documentation you need to substantiate your deductions you are going to be doing. It also helps to understand whether you can even begin to attempt to take some deductions prior to the tax year so that you can plan ahead with your business and structure things accordingly.
Anyway, to make a long story short...er, I scheduled a meeting with the tax auditor. She asked to have the meeting at my house, but I said no. You do not want the IRS in your home. Period.
The meetings began in the fall of 2009. Let's move forward passed three more meetings, and then two more meetings with two other auditors. Now, we are in May of 2011. The result was a letter I received that stated I was going to tax court. That is not something anyone wants to end up doing. I dug in deeper and began to prepare. The court date was scheduled for Oct. 2011.
In August of 2011, I received a letter from a tax mediator. She said she wanted to meet with me to go over everything, to which she had the power to decide if this case needed to go to court or not. She could then issue a statement to the tax attorney on record and recommend, if necessary, to settle out of court.
During the previous meetings that had taken place over the past year two years I would give as much information as needed. In legal proceedings, you never want to show your hand until its time. This was my last moment of truth, so I took whatever last documents I could muster to substantiate my deductions noted in my return.
The meeting went well. We discussed the year in question. I had showed her checks, statements, emails, and even some legal documents. She was clicking away at the computer and at one point sat back, looked at me and said, "I don't think you will owe anything." We discussed a bit why she came to that conclusion.
I laughed and said, "I'm not going to celebrate quite yet, until I have that in writing. But, if I don't owe anything as based on what you said, the tax differences between the deductions change a little, don't they?"
She looked at me, smiled, clicked away, and finally said, "Yes, it would seem that you might even be eligible for a refund. Now, I will do the final calculations and submit the findings to the court. It will be up to them to take this information and they will make a final decision as based on my recommendation. You should hear something from me in about 10 days."
About a week later, I got a call from her on my machine that said that I will not be needing to go to court and will be getting a check from the IRS for $4,500. Nice.
I waited.
The court date was approaching and I had no document that signed off the tax debt, the court date, or I had not yet received any refund. So, I called the mediator and told her I would still be showing up to argue in court on the scheduled date unless I hear anything otherwise. She said that wouldn't be necessary. I told her I needed a signoff document that would say that, or as far as I'm concerned I am scheduled for court. I told her I will go to court and show all of the documents I showed her and argue my case, and win, and therefore it will be a waste of time for all of us. She told me to hold tight and she would get the necessary documents for signoff completed by the tax attorney on record to the case and send them to me.
I received a letter from the IRS about a week later with the judges order. I would not have to show up to court and I would be receiving a refund for the amount we discussed. Two months later, I got my check.
I will say that it is a very empowering feeling to act as your own attorney, and win. In State Court that is called acting in Pro Per. In Federal Court that is called acting in Pro Se. It takes a lot out of someone to act as their own attorney and it is not easy. But, it can be done. That is how law began in the first place. Back in the old anglo world people would argue for themselves. What people don't realize is that attorneys are human and make mistakes. I have used attorneys before who have done nothing but take my money. Some attorneys do good work for their clients and some simply spin the wheels of justice. Their mistakes will cost the client a lot of time, aggravation, and money. Most attorneys lose a case on some minor issue that they overlooked, however, will never tell their clients that they fucked up. They will find a way to blame the evidence, the court, the system, but never them. So, I choose to defend myself as much as possible.
Now, there are a lot of other details I left out during this whole scherade, and I will include those in my book, however, I also wanted to point out that while I was going through this I was also dealing with the beginnings of a substantially more serious issue at the same time. I simply wanted to get a bit of a back story as I bring you into the other lawsuit that began taking shape.
I will follow with that story next.
This, the 322nd entry in bloggoland! Thanks for reading and coming back. I always enjoy the comments, emails and the banter!!
(c)Copyright 2007 - 2011 Doug Boggs
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