Betty W. Phillips, Ph.D., Psychology
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It's March and Taxes are Coming!



                                                              It’s March and Taxes Are Coming!


Oh no, the T word!  I know you’d rather think about spring instead of taxes. But, even worse than your yearly taxes, is the prospect of an audit. Don’t stop reading now because I’m going to give you some advice and tips about successfully combating this imagined horrific catastrophe in your life.  Several years ago my husband and I did confront the reality of an audit and the possibility of a devastating result. So I’m going to share some information about this kind of situation so you can rest assured that you can successfully deal with this issue if or whenever it arises in your life.  Before you go on to the next article in the Chatham County Line, why don’t you retain this edition of the paper or bookmark it on my website so that you can access some of this advice if or when or if you would ever need to do so.


To skip to the end result, I’ll tell you that our strategy was effective and the only audit cost was due to a minor error I had made and discovered before my husband and I went into the audit.  However, the process was very difficult partly because of our life circumstances and partly because of the tenacity of the auditor hoping to collect large sums of money. Also, you may want to know, an audit is a great way to lose weight… as well as sleep and peace of mind!


Two aspects of the problem arose immediately. When I received the IRS audit letter, I was in the middle of several out-of-town trips, one to be with my sister and her family during the last period of her life as she battled cancer in New York and also an out-of-town vacation trip scheduled and paid for.  As our particular audit involved our small businesses, the IRS had identified issues spanning 10 years of taxes which it appeared that they could audit due to ongoing business expenses.  As the audit interview was scheduled during one of our out-of-town trips, I immediately called the auditor to explain the situation and ask for a delay. The auditor did not answer the phone so I had to leave a detailed message. Apparently I must have forgotten to mention my phone number, a problem the auditor later identified.  However, that detail was the last thing on my mind as I left my message. I knew the government knew my address and telephone number as well as the fact that her equipment would have identified the source of the call. As we were packing several days before the trip, we received another letter from the IRS stating that the audit was completed and, because we had not participated, we would owe over $30,000 to the government! You can imagine our state of mind as we left for our trip, knowing there was no way that we could ever pay that bill! When I was a child I had read about “the poor house” but I had no idea what that was like or whether we would have to be incarcerated in a debtors prison.  Now, readers, I am exaggerating!  It was awful but not that awful! I had already taken several steps and knew of other effective strategies. Nevertheless anxiety was endemic in our lives for several months.


So now to the first “tip” in the article. Whenever you leave a phone message for an IRS employee, always leave your telephone number.  The remainder of this tip is to remember to be very organized in all of your dealings with the IRS. Plan your strategy and take notes or record your conversations so you will have a detailed response whenever needed.


The next effective strategy is to find the most authoritative books about surviving audits and purchase two of those books. As you can imagine, audits have been going on for many years and many experts have likely become rich writing about effective strategies for success in coping with audits. Why two books? There are some differences of opinion and many different types of audits, and you want to be prepared for whatever problems will face you in preparing your information and surviving your audit. I’d also advise reviewing reader input about these books on Amazon. We found detailed comments on Amazon which helped us pick the books we needed for our circumstance. We were able to find two wonderful and reassuring books which helped us guide our way through the horrific quagmire presented by the representatives of our government.   Yes, to us it was a horrific quagmire because of the circumstances I described above and the amount of time it took us to prepare the information and survive the audit. Several of those circumstances were specific to our situation but I know that others have faced equally difficult circumstances.  I doubt that our friendly government would like to be called a “horrific quagmire” so please don’t tell them about my word choice!


The books will tell you the important fact that you can appeal audit findings. This does not sound important but it is critical information to understand. IRS auditors and supervisors know that the appeal process is designed to be helpful and supportive to you the citizen (or, as you may feel in this process, the “victim” of the audit.)  The IRS personnel know that the citizen has a very effective voice in this process and will often prevail unless the audit is carefully done and very fair to the taxpayer. We did not in fact have to use an appeal. However, as clearly well read and informed participants in this process, the IRS personnel knew that we were poised to appeal if necessary.


Often you will find that the supervisor of the auditor will provide friendly assistance to you. The supervisor is well informed of the appeal process as well as the strengths and weaknesses of the audit process. The supervisor as well as the auditor will be judged not only on the proceeds from the audit but also the perceived fairness of the audit to the taxpayer.  In our case I spoke at length to the supervisor about the issues of our audit, the problems with the timeline as well as the arbitrary nature of the closure of the process before we had an opportunity to participate.  The supervisor also had a very human perspective about the process and was sympathetic to our plight, including our distress about the timeline issue as well as my difficulty in dealing with the very real problem of my sister’s terminal illness and need to visit her whenever possible.  She also was aware of the time constraints for the auditor as well as our distress in being told the audit could cover issues from 10 years of data. Ultimately we were allowed sufficient time to schedule and complete the audit which only focused on the last two years of data and we did not have to prepare any more information.


In our case the audit was conducted in the IRS Greensboro office because it involved our small businesses.  Be prepared if you ever have to go there. It looked like the office was equipped for a war zone… and indeed it felt like a war zone!  The building looked like a fortress prowled by armed guards. No one can enter the office until they are checked again by armed guards with their date and time information presented. Then several steps must be taken to the audit office, buzzed in initially by the armed guard and then buzzed in several other times through locked doors.  Interestingly, the audit timeline was compressed. The auditor appeared to spot check information, only going in depth when a possibility appeared of a problem in the data. We had carefully prepared and sweated over every piece of paper we provided, but the auditor skipped around the information. The supervisor was on hand for the audit which we found out as she appeared, smiling, at the conclusion of the interview. 


We left the audit feeling relieved as no problem had been identified other than the one I had described to the IRS personnel. Horrors, a few days later the IRS report appeared, citing a problem which had not been identified in our audit interview but assessing fines of several thousand dollars. Having participated in the audit, I felt that this was a mistake which I communicated immediately to the auditor. Lo and behold, she agreed and the audit was finished revealing only the minor problem I had identified. Nevertheless I had the “wonderful” opportunity to lose a few pounds, a lot of sleep and gain some gray hair among the few locks of hair remaining on my head after the audit.


Now let’s think about the future. Perhaps we as taxpayers could make input into IRS policies and procedures for audits. Some politicians are already talking about a “political revolution.” As we participate in citizen input regarding policies and procedures, we could call for more reform in the audit process. Many years ago, in the 1970s, we were called for an audit. At that time the office was open and friendly and the auditor approachable and even helpful.  If you can imagine this, she took time to help us out in the audit process. She even helped us find more deductions so we in fact received money back from the audit!  I couldn’t imagine the current audit process being so friendly and helpful.  As I think about it, there were some “good old days” in our country. With all the concern about police and police brutality, do you remember when police were called peace officers?  We need to think about some of the negative changes that have occurred in our country over time and consider providing citizen input into our government procedures.


There is one more secret weapon in this process: prayer and guardian angels.  I felt we had liberal support in this area also and were able to survive the audit knowing we were receiving other sources of help. I didn’t see or sense any angels in the IRS building and I doubt they would be happy dwelling there. But otherwise, in our homes and businesses, we can find loving help from the universe. I do feel that we received such support.  The 23rd Psalm is a wonderful source of consolation. Read or recite it to yourself and you will start to giggle about parts of this Psalm as you think about an IRS audit. Go ahead try it!


So we endured a difficult process and survived to be able to tell you of the many options and checkpoints we as citizens have in this process.  Why am I writing this article now? I’m not sure but I think I was prompted from above perhaps, or so I felt, to send this information out to all of you. Do prepare your tax information this year but don’t spend the time trembling in fear. Know that there are many remedies available from many perspectives for all of us. So enjoy your March and April without excessive worrying and with information that we can survive even when we feel like we are “walking in the shadow of death”!