Texas cattle ranchers audited by IRS issue dire warning to Americans: 'They want to get you'

[SrsTwist]

Texas cattle ranchers audited by IRS issue dire warning to Americans: 'They want to get you'

David and Deborah Hajda were audited after spending money to rebuild a tractor

Texas cattle ranchers audited by IRS issue dire warning to Americans: 'They want to get you'

Cattle ranchers David and Deborah Hajda recounted their grueling experience with an IRS audit and issued a dire warning to middle class Americans 13 years later.

www.foxnews.com

 

[V-Tach]

Why yes, yes they do.............

Does anyone think not?

 

[Army 1911]

We got audited 5 years in a row, actually 9 because the first audit was for the 3 previous years too. We won eventually in tax court but lost because of legal fees which we deducted the next year. All this was over my wife's deductions on her professional library as an educator. This was in the late 80s.

 

[benenglish]

Texas cattle ranchers audited by IRS issue dire warning

So, lemme see if I've got this straight. In order for Fox to come up with that click-baity news headline, they had to find a story about something that happened 13 years ago?

Wow. Really sounds like an imminent threat...

Sheesh.

 

[SrsTwist]

So, lemme see if I've got this straight. In order for Fox to come up with that click-baity news headline, they had to find a story about something that happened 13 years ago?

Wow. Really sounds like an imminent threat...

Sheesh.

In light of the 87,000 new IRS employees they're hiring I'd say the threat is grave and imminent.

 

[Sasquatch]

In light of the 87,000 new IRS employees they're hiring I'd say the threat is grave and imminent.

Aye, since they're more than doubling the size of the agency with this nonsense.

 

[deemus]

And that’s why you get a CPA to prepare your tax returns, and represent you should you get audited.

 

[TheDan]

And that’s why you get a CPA to prepare your tax returns, and represent you should you get audited.

From the article, one of the things they got nailed on was incorrect deductions their CPA was making. Most CPAs aren't attorneys either so they can't really "represent" you.

 

[deemus]

CPAs represent people until it gets to tax court. Millions of audits are handled by CPAs every year, and most never get to tax court.

 

[benenglish]

Most CPAs aren't attorneys either so they can't really "represent" you.

Not exactly.

Circular 230 is your friend.

Section 10.3(b):

...Any certified public accountant who is not currently under suspension or disbarment ... may practice before the Internal Revenue Service

Section 10.2(a)(4)

Practice before the Internal Revenue Service comprehends all matters connected with a presentation to the Internal Revenue Service or any of its officers or employees relating to a taxpayer’s rights, privileges, or liabilities ... Such presentations include, but are not limited to, ... representing a client at conferences, hearings, and meetings.

So, yes, a CPA does formally represent someone before the IRS until the case winds up in a court. Then you need an attorney...but then the attorney isn't representing you before the IRS; they're representing you before the court.

In fact, most tax attorneys don't represent anyone before the IRS. If they're in a firm of any size, they'll have a CPA or Enrolled Agent on staff to handle that kind of grunt work, just like tax attorneys generally don't actually prepare returns. Smaller practice tax attorneys are usually networked with CPAs and other return preparers who call the attorney once things look like they're headed to court.

Of course, if you're rich enough to pay the hourly fee of an attorney to show up at your audit, well, then there are plenty of tax attorneys who will be happy to take your money. At the audit level, they generally won't do nearly as good a job of representing you as a CPA but they'll show up, anyway.

ETA: Ninja'd.

 

[benenglish]

In light of the 87,000 new IRS employees they're hiring I'd say the threat is grave and imminent.

There may be a grave and imminent threat but it's not coming from 87K new employees.

Over the last 25 years, the agency has shrunk dramatically, nearly all that with retirements. The IRS institutional knowledge base walked out the door years ago. Getting a few thousand Special Agents, Revenue Agents, and Revenue Officers up to speed and doing their jobs will take 5 years per class, although they'll start working cases in about a year. Tax Compliance Officers can be productive faster than that and, given that the new hires will be coming after the middle class (that's where the money is, after all) then I would expect the TCOs to be the focus of hiring.

The overwhelming number of those <8,000 new employees per year over the next decade will be support folks and not germane to this discussion.

But I said there may be a grave and imminent threat. What about that? Well, the thing I fear is automation. Expanding reporting requirements mean that the IRS has access to more info on everyone than ever before. They don't need more bodies on the payroll to start writing algorithms that audit your return and send you a final report ("Sign this or go to court!") without any human judgement being involved.

In the past, there were multiple levels of appeals but they were all discretionary. That could mostly go away if the IRS wants to start playing hardball. Believe me, the IRS rarely plays hardball; it creates too much bad publicity that inevitably results in budget cuts. Also, the executive staff loathes testifying before Congressional committees.

But if they start automating too much and begin playing technological hardball, a lot of people will get hurt who really, really don't deserve it.

 

[toddnjoyce]

… Well, the thing I fear is automation. Expanding reporting requirements mean that the IRS has access to more info on everyone than ever before. They don't need more bodies on the payroll to start writing algorithms that audit your return and send you a final report ("Sign this or go to court!") without any human judgement being involved...

That’s what bothers me, too. Yellen didn’t say ‘no new audits’ in her direction the the IRS the other day, instead all she said was ‘audit at the same rate, with a larger workforce’. Combine that with automation, and audit by mail is going to unintentionally sweep up a lot of people who will likely decide to write a check to make the IRS go away instead of fight it.

 

[SrsTwist]

There may be a grave and imminent threat but it's not coming from 87K new employees.

Over the last 25 years, the agency has shrunk dramatically, nearly all that with retirements. The IRS institutional knowledge base walked out the door years ago. Getting a few thousand Special Agents, Revenue Agents, and Revenue Officers up to speed and doing their jobs will take 5 years per class, although they'll start working cases in about a year. Tax Compliance Officers can be productive faster than that and, given that the new hires will be coming after the middle class (that's where the money is, after all) then I would expect the TCOs to be the focus of hiring.

The overwhelming number of those <8,000 new employees per year over the next decade will be support folks and not germane to this discussion.

But I said there may be a grave and imminent threat. What about that? Well, the thing I fear is automation. Expanding reporting requirements mean that the IRS has access to more info on everyone than ever before. They don't need more bodies on the payroll to start writing algorithms that audit your return and send you a final report ("Sign this or go to court!") without any human judgement being involved.

In the past, there were multiple levels of appeals but they were all discretionary. That could mostly go away if the IRS wants to start playing hardball. Believe me, the IRS rarely plays hardball; it creates too much bad publicity that inevitably results in budget cuts. Also, the executive staff loathes testifying before Congressional committees.

But if they start automating too much and begin playing technological hardball, a lot of people will get hurt who really, really don't deserve it.

Thanks! That was an intelligent and informed response.

 

[benenglish]

CPAs represent people until it gets to tax court.

Not just tax court. Court, period. There are lots of IRS functions that wind up in Federal District Court.

 

[deemus]

Not just tax court. Court, period. There are lots of IRS functions that wind up in Federal District Court.

I'm glad I didn't know that.

 

[TheDan]

I'm glad I didn't know that.

Yeah, I'm really glad I don't have first hand knowledge about a lot of this stuff

 

[SrsTwist]

But I said there may be a grave and imminent threat. What about that? Well, the thing I fear is automation. Expanding reporting requirements mean that the IRS has access to more info on everyone than ever before. They don't need more bodies on the payroll to start writing algorithms that audit your return and send you a final report ("Sign this or go to court!") without any human judgement being involved.

In the past, there were multiple levels of appeals but they were all discretionary. That could mostly go away if the IRS wants to start playing hardball. Believe me, the IRS rarely plays hardball; it creates too much bad publicity that inevitably results in budget cuts. Also, the executive staff loathes testifying before Congressional committees.

But if they start automating too much and begin playing technological hardball, a lot of people will get hurt who really, really don't deserve it.

I'm surprised they're not already using AIs to search every single tax return for audit triggers and then automatically generating digital audits. That's the level of automation current tech already allows. Likely that's coming soon,

 

[Sam75022]

I'm surprised they're not already using AIs to search every single tax return for audit triggers and then automatically generating digital audits. That's the level of automation current tech already allows. Likely that's coming soon,

Yes, IMO IRS has been automating since decades ago with electronic filing and also having IRS clerks entering manually all those paper filing to their database. They use analytical tool / algorithm to “red flag” any filing/deductions that is outside the normal range of your peer income group. (I.e have you used turbo tax where they assess likelyhood of audit at end?)

So now with all those inconsistent red flags that must be popping up and limited resource at IRS to start doing field audit/enforce Internal Revenue Code, what is FED or anyone with limited resource going to do?

How The IRS Uses Automation To Review Tax Returns - Gartzman Tax Law Firm, P.C. | The Gartzman Law Firm, P.C.

While the IRS does not have the manpower that it had 20 years ago, there are certain taxpayer actions that can trigger an audit by the Internal Revenue Service. As technology continues to evolve at a significant rate, the IRS has increased its use of automated programs to identify tax returns...

www.gartzmantaxlaw.com

 

[benenglish]

Are y'all actually interested enough for me to explain this stuff? It could get really lengthy.

 

[Sam75022]

If this does not instill fear into you…