Are You Prepared for an Intrusive Audit by IRS Into How You Live?

Summary:
Auditors at Internal Revenue Service now consider
a high living lifestyle in their examinations, Like a big house, expensive
car. With the income reported on your tax return, can you afford them?



"How can you afford a new Cadillac on your income?" asked the agent.

The Internal Revenue Service plans to ask more of these questions. Taxes on
unreported income have zoomed to an estimated $60 billion a year. Because of
this, the agency has been criticized for shirking its primary
responsibility -- catching tax evaders. So it's shifting some resources from
fighting drug trafficking to finding tax cheats.


To flush out this money, the IRS will consider it open season on people
generally paid in cash and on small businesses with cash skimming potential.
Agents won't worry too much about income paid employees and owners of stock,
bonds and certificates of deposit. The payer reports this to the agency, and
the IRS computers find the people not reporting it.


The IRS' secret weapon is the "lifestyle audit" or "economic reality check."
In the past agents didn't look beyond the paper records. They found
overstated deductions, but missed unreported income. In future examinations,
they plan on also comparing a taxpayer's lifestyle with income reported. Are
you a maid driving a new Mercedes? Do you operate a small grocery store, but
live in a 24-room mansion? If your income doesn't match expenditures, agents
will insist you prove how you got the money.


This economic reality audit would include a personal interview with
questions about home improvements, the location of any safe deposit box, the
amount of loans and other personal matters. It might also include a tour of
the business premises to confirm depreciation or inventory items or
questions asked suppliers, customers or neighbors.


Most audits will start with many intrusive questions. CPAs and lawyers
complain the IRS is fishing in dangerous waters because some questions
invade a taxpayer's privacy. In the past the IRS cast this lifestyle audit
net only if the taxpayer looked criminally rich. In that case, because
different rules apply, the taxpayer's accountant would call in an attorney
skilled in advising a client in criminal tax investigations. The lawyer
would advise which questions to answer. In the usual audit, a taxpayer
should cooperate, but with a criminal audit many questions shouldn't be
answered.


The IRS says it doesn't want to call this extra probing a lifestyle audit or
an economic reality check. That sounds too much like interfering in a
taxpayer's life. Instead, it prefers to call it a financial-status
audit.(more at IRS Audits)



"Capt. Rob" wrote in message
ups.com...
Poor Doug....this stuff seems to matter to him, so I'll smack him
around a bit!


2 family house in Brooklyn........owned
Two bedroom Apartment in Kew Gardens....owned
Two bedroom apartment in Brooklyn....financed
Beneteau 35s5...owned
2006 Subaru Tribeca....owned
2006 WRX STI.....about to be financed

That's just the tip of the iceberg. I inherited quite a nice stock
portfolio and a collection of gold coins that I've had insured for
400K. Hell, my wife's wedding and engagement ring could buy your dopey
trawler! DId I mention that my wife also owns property in Ohio or that
we bought the property her grandmother's home is on so she could live
rent free?
Doug, I'm only 43!!!! I've had some luck, no doubt about it. I
inherited the home and coins. Should I have turned it down? I'm not
rich and I still work part time. Only 43, Doug!

You're one sad dude, Doug. But the only thing that should "matter" to a
low life scum like you is that I own a better sailboat. I represent
what you failed at everytime you turn the key on that powerboat.
Frankly, after buying it, it really took some shameless balls to stay
in this group. You must have very little pride indeed! Some folks will
always have more, but it's crushing your kidneys that it's me!

Oh, and...BWAHAHAHAHAHAHAHAHAHA!

Capt. RB
35s5....A better sailboat than Doug has ever/will ever own!
NY