Reconciling assholes for nearly a decade.

Pay the IRS random amount

I know, I know.  In the back, back of my mind I was thinking of avoiding the hassle of my taxes and just sending the IRS what I think I owe.  Throw em some cash.  I didnt make as much because I was out of work for a bit, they probably wouldnt audit me.

Dont they have hundreds of millions of forms to deal with.
Permalink Bot Berlin 
April 4th, 2007 5:28pm
And they have LOTS of computers to figure out what you really should owe. 

If you just throw them some cash, it might take a few years, but they WILL eventually find out what you really owe, and ask you for it.  As well as interest and penalties.

So, the best part of valor is to at least figure out an estimated tax, and file for an extension.  And send them a check when you do, so at least they have their cash.

Now, it's ALMOST as much trouble to figure out the extension form as it is to file, so this isn't saving you much.
Permalink SaveTheHubble 
April 4th, 2007 5:32pm
Of course, if they owe you, you'll never hear a peep.
Permalink JoC 
April 4th, 2007 5:33pm
Freedom to Facism
Permalink Mr Russo 
April 4th, 2007 5:35pm
> And they have LOTS of computers to figure out what you really should owe.

> If you just throw them some cash, it might take a few years, but they WILL eventually find out what you really owe, and ask you for it.  As well as interest and penalties.

The key is the statute of limitations.  They've got two years from the date you file your return (or April 15th if you file early) to assess a tax or find fault.  If they don't get around to it by then you're off the hook, the only way they can collect a different amount is if they have evidence of fraud.
Permalink Michael B 
April 4th, 2007 5:40pm
You can Google search for IRS horror stories.

They were auditing people's decades old returns which, of course they didn't have anymore.  Since they were assessing back taxes plus late fee penalties and interest taxpayers were getting terrifying 6-7-8 figure tax bills.

Congress reformed the IRS and introduced the SOL to avoid situations like that, IRS is not allowed to reach further back in time more than 2 years unless they can substantiate a fraud claim.

I think.  I'm not a tax attorney.
Permalink Michael B 
April 4th, 2007 5:44pm
Is that for real? The law changed? I've known a couple people who have been through the audit that goes back 10 years routine. You end up screwed because you don't even have receipts that go back that far and so you have to pay whatever they say.
Permalink Practical Economist 
April 4th, 2007 5:52pm
>Is that for real?
Yes.

>I've known a couple people who have been through the audit that goes back 10 years routine. You end up screwed because you don't even have receipts that go back that far and so you have to pay whatever they say.
This sounds like your buddies were part of what is called "taxpayer compliance audit." Yes, those are hell. Part of the purpose of tca is to pick a statistical sample of taxpayers and using a fine detailed audit, to determine how accurate taxpayers are filing.

Auditors do this sort of thing in businesses when going over the books: pick a few invoices, then try to find/follow all the paperwork that goes with it. You can't follow all the paperwork for all invoices, but if you find a few problems, then you look for more. If you don't find any, then your client is probably honest.

In these cases, you are most likely providing the evidence that they will use against you. So what you do is keep your returns forever, but discard the supporting documentation when the SoL expires.

If you never filed a return, then there is no statute of limitations.

There have been more than a few cases where subcontractors who were supposed to enter returns in the system, instead shredded cases and warehouses full of returns. You might have filed for 2001, but the IRS has no record of it. So if you keep the 1040, you have proof that it was filed. The burden is on them to prove it wasn't filed. If you don't have the supporting documentation, the proof is on them to prove it is false.

If you own a house, and have a mortgage, etc, then you should plan on keeping the supporting documentation until a few years after you sell it and file the capital gains/loss. If you're houseless, then you should discard the supporting documentation behind the return about 3 years after it was filed. Check to see what the real record retention requirements are.
Permalink Peter 
April 4th, 2007 6:22pm
IRS? Never heard of them.... Let's see if they are men enough to visit Tony's restaurant...
Permalink Tony MBA 
April 4th, 2007 11:37pm
Tony, you may know them better as "The Feds".

And even you don't screw with "The Feds".
Permalink SaveTheHubble 
April 5th, 2007 9:06am
I'm going through this bullshit right now with my 2003 state return which was "never filed".  I'm still waiting for the transcript of my 2003 federal return to arrive from the IRS so that I can compare notes. For some reason I haven't gotten it yet and I'm going to have to call back.  Hopefully nobody has all my personal information on their kitchen table now.  :P

In any case they're only trying to bone me for just under $800, not thousands.
Permalink Send private email muppet 
April 5th, 2007 9:15am
Just remember that the IRS has computers to figure our what's a random number and what's not. They do.

For example, the first digit of a number (say income from a mutual funds' capital gains dividend) is much more likely to be a 1 than a 9.

Look it up and don't just use random numbers.
Permalink Send private email strawberry snowflake 
April 5th, 2007 11:52am
> If you own a house, and have a mortgage, etc, then you should plan on keeping the supporting documentation until a few years after you sell it and file the capital gains/loss. If you're houseless, then you should discard the supporting documentation behind the return about 3 years after it was filed. Check to see what the real record retention requirements are.

I'm never throwing ANYTHING away.  I've got history going all the way back to my 18th birthday in case I ever need it.

Although by the looks of your post it sounds like this can work against you?
Permalink Michael B 
April 5th, 2007 4:07pm
For dealing with RevCan (Canadian equivalent of the IRS):

Any information you have will be used against you if at all possible.

Any information you don't have will be used against you as well.  If you don't document something you should have, they'll assume the worst.

I don't think the idea of keeping your return to prove you submitted it, but throwing away the supporting docs would work here.  The bastards are RevCan would just say "you can't prove that's the right amount in box 51, so we're disallowing it."
Permalink Send private email Ward 
April 5th, 2007 4:18pm
> I don't think the idea of keeping your return to prove you submitted it, but throwing away the supporting docs would work here.  The bastards are RevCan would just say "you can't prove that's the right amount in box 51, so we're disallowing it."

Time is so absolutely precious.  My biggest fear is being is  being questioned by the government and losing days or weeks of my life to defend myself, having to sift through documentation, speak to attorneys, auditors, etc.

My track record on protecting myself from being ripped off isn't very good.  Usually I just accept the beating without contest in favor of moving on with life.  Money's easy to make back, time is not. :(
Permalink Michael B 
April 5th, 2007 4:33pm
Does anyone sell tax insurance?

It would be nice to pay a premium in order to have someone else manage all of the risks of taxes for me.  The whole shebang, they'll cover any differences in taxes owed, attorneys, accountants, etc.  Just give me a fixed monthly cost and ease my mind.

Worrying about this shit really does keep me awake some nights.  It might keep you awake too if you've read http://www.neo-tech.com/irs-class-action/
Permalink Michael B 
April 5th, 2007 4:37pm
I think in theory, this is what you pay accountants for.  Not those scammers who set up in the mall, but real accountants.
Permalink Send private email Ward 
April 5th, 2007 4:39pm
I think this is why people go to H&R Block.  They'll go with you if you get audited.

You pay a little more, and they may not be the BEST at finding loopholes, but they're good enough.

Isn't that what "insurance" would do for you?
Permalink SaveTheHubble 
April 5th, 2007 4:43pm
No, insurance would, in exchange for a monthly premium:

* Pay all of my taxes owed
* File all paperwork
* Certify that the tax returns are accurate
* Respond to all inquiries/audits
* Pay for attorneys to represent me if necessary
* Cover any additional tax assessments, f/e if government determines I owe a different amount THEY PAY IT

Basically, I should be totally oblivious.  The better they do their jobs, the more of the monthly premium they keep.

I'd probably hand over 30% of my paycheck if they could guarantee that I'll never have to think about taxes again my entire life.

Best of all, competitors will be FIGHTING tooth and nail to offer me the same services and protection for 29%, 28%, etc.

*orgasm*
Permalink Michael B 
April 5th, 2007 4:57pm
You can get close to that kind of peace of mind with the system in the UK. If you file your tax return by the 4 month deadline, the government will calculate your taxes for you and automatically collect the amount you owe via monthly deductions from your paycheck. Your only responsibility is to report all your income accurately and keep the supporting documents for inspection if requested. The government also provides a free web interface for submitting your tax return that covers most common forms of income. So not only will the government calculate your taxes, you don't even have to pay for the service.
Permalink Send private email bon vivant 
April 5th, 2007 5:08pm
I make friends with IRS people so they ask for less money :)
Permalink LeMonde 
April 5th, 2007 9:21pm

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