Random tax audits are evil. Even if a person keeps reasonable records the infernal revenue will find something. For instance ... If you deduct your car and keep a milage log. That log is NO GOOD if you don’t have a repair receipt ... even for an oil change ... with the milage on it on as a second party proof. If you do your own repair / oil changes ... you’re out of luck. If you pay deductable bills on line ... the cancelled check is not enough proof. The IRS brings people in and disallows EVERYTHING including home interest property taxes ETC. with the thought that most people can’t afford to hire someone to defend them ... it’s cheaper to just pay the IRS extortion money. I know the hard way recently
Yes, and you left out the part that this means each taxpayer selected at random will likely pay a CPA or enrolled agent hundreds or thousands of dollars to represent them.
Can you explain how a check made out to your local tax collector for prop taxes, with an amount matching your prop tax statement, with that check showing as cleared on a checking account statement can be disallowed..?
Likewise, can you explain how a home interest deduction on 12 checks amounting to 12 mortgage payments of equal amounts (for a year, of course) and an amortization table and a copy of your mortgage note could possibly result in a disallowance of your deduction for home mort interest?
I mean, these are (at least to my way of thinking) 100% unassailable proofs of having spent those monies on those things.
I take it you've had a rotten experience and I sympathize. I was audited by the CA State Bd of Equalization (for sales tax collection) in, IIRC, 1986. As I was selling expensive equipment at the time, my quarterly sales tax collections ran to $9K-$11K a quarter at the time. The auditor actually tried to solicit me for a bribe, I called the State Attorney general who was incredibly interested and two agents showed up on my doorstep 45 minutes after my call(!) They ultimately set up a sting, including hidden camera and mic, giving me marked $100 bills to pay him, and they arrested the guy standing in line at the Bank of America with $1500 in hundred dollar bills and a deposit slip to his account, LOL. Of course, I then had to go through the whole audit process again from the beginning.
I appreciate the IRS is different, they are in effect a meta-governmental agency in terms of unbridled power and can and will make your life miserable should they choose to do so.