"Bozo" wrote in message ink.net...
| 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)
|
|
|


Looks like I'm just about audit proof. My lifestyle and appearance
is that of a homeless person living aboard an old boat. (In spite of
that, I could buy Bobsprit lock stock and barrel - not that I'd have
any desire to, being happy with a simple life close to nature.)

Few things in life are better than living aboard away from interruptions
while snuggling up with a good book. Here's a recommendation for
you manly men. It's called "Bitter Root Blood" by John Van Vorst
and Jodi L. Westendorf and is about part of the life of one Joshua Walker,
a trapper working in the Bitterroot Mtns. in the 1840's and a white woman
he "steals" from an Arikara Indian scouting party.


"If you live in God's places, you will see God
when you look outside yourself.
If you live in man's places, you will see man
when you look outside yourself.

"For me, whatever I see outside myself
will eventually become what I see inside myself."

---- From the Epigraph by Capt. John James Van Vorst 1998