I need your help!?
I am getting Audited by the IRS. Everything is clean. My **** account screwed up on my form which triggered the audit. The irs wants to inspect my home office. What are their legal rights in doing so? Can they look through files? Computer Information? I couldnt find it in the tax code. They dont have a warrant and I have nothing to hide. The agent is overzealous young asian trying to prove herself. She I get attorney involved and put the agent on the definsive. Can I sue my accountant get the agent fired for harrasment? Please help.
I Need Your Help!!!!?
31
Dec
exirsman
December 31, 2009 at 9:59 am
Everything in the return is YOUR responsibility. You should have carefully reviewed it before you filed it or had your accountant file it for you. You should hire the accountant to re-file the corrected return and to represent you.
The IRS probably just wants to substaniate the home office deduction. They will need to see the entire house to establish square footage and the area just used for the business. Make sure there isn’t anything in there that’s not for the business. No guest bed or any personal items.
It can’t hurt to hire an attorney if you think you need one.
D S
December 31, 2009 at 10:10 am
Yes, IRS has a valid reason to verify your home office. You can refuse to let them see it and then they will disallow the claim. NO, they can’t snoop through your personal stuff or PC in a normal audit. They can measure the area of the home office and check to see if it is a work area. It is not harassment and she will not be fired for asking to see the home office. Be nice to the agent, getting into a hostile confrontation will result in negative outcomes.
You have a right to hire a CPA, Enrolled Agent, or Attorney to represent you. I highly recommend that you hire a CPA or Enrolled Agent who does representation work. They can talk to the agent so you won’t have too! Do not hire some out of state outfit that advertises on TV.
I once did one of these audits and the taxpayer never wanted to talk to the agent so she gave me the keys to her house and I met the RA there and we just went to the home office and he was fine with it once assured that it was a work area and saw the proof (files, lead cards in a tickler system, printer/fax and PC etc.-he did not request the PC be booted up).
As far as your tax preparer goes, they may not necessarily be negligent; you might just be under audit for unusual expenses claimed. Have a tax pro look at the return. Get a second opinion. If the return was prepared incorrectly, you might have a claim. If he was a CPA or Enrolled Agent, you can file a complaint with the State CPA Board or EA Society. They may or may not have malpractice insurance. It is probably not worth the trouble if they don’t have insurance.
jpr30200
December 31, 2009 at 10:19 am
It’s not uncommon for the IRS to inspect a home office to verify that it meets the rules for taking a deduction. That isn’t harrassment. They can look through pretty much anything in your office. If you feel you are on shaky ground, getting an attorney isn’t a bad idea. But don’t think that will put the agent on the defensive – she has her job to do and isn’t likely to be intimidated.
Judy
December 31, 2009 at 11:07 am
You must have home office expenses. They are looking to see that you actually have the space set aside for only office purposes.
They will probably measure the sq footage to compare against the total sq footage of the house to make sure the amount allocated is correct.
They can’t look through files, drawers, etc.
Although home office is a legit expense. Many people take advantage. Even though it is legit, I have never claimed the home office to avoid any flags for an audit.
Tim
December 31, 2009 at 11:45 am
Maybe instead of hiring an attorney, yet, you request that the original accountant attend the audit / interview. Unless you expect their personality will be inflammatory – you don’t need that, with this young ambitious auditor. If that accountant would be a liability in the meeting, then do invite another accountant or attorney. I think it would not put the auditor on the defensive; it would be common for two people to represent the business.
I hope Tim is right that the auditor is primarily interested in the home office, and not other records. I have all my records, too, but I certainly don’t want to go through them with an IRS auditor.
The best advice is, be cooperative and calm. If this agent is spicy and out to prove herself, she sounds like she’ll be a handful of personality. Even if it’s not by-the-book, she could make some hours of your life miserable, so cooperative+ calm should reduce her likelihood of going off the deep end. I hope so, anyway.
To answer your specific question, you probably could file civil charges against the accountant if they were deliberately negligent. Don’t know if you’d want to, though – more hassle for you than you need right now. You probably have no recourse against a bad-personality IRS agent, but stay aware of assault laws and threats she may make against you. That sounds ridiculous, but it’s probably the only actionable thing she can do that gives you the right to charge her or take action to get her terminated. Just being a jerk apparently does not preclude one from being an IRS agent. Though contrary to popular belief – it is not a prerequisite
Best of luck. Glad to not be you, today.
AnnaBell
December 31, 2009 at 11:50 am
You sign the tax return and you are responsible for what is on the return. A home office is the biggest red flag for a audit. You cannot have anything in the room that is used as an office that does not have anything to do with the business. You can’t have anything in the closet, etc. You have to prove that room in the house was used for business only and never used for any personal use at all.
If you have files in there they can look to see if they are personal or business. If you have used your computer for anything personal I hope you did not claim it as 100% business use. I don’t know if the IRS will drop it if you agree to file an amended return and pay the taxes and penalties and interest for the taxes you would have owed without the deduction.
You could retain an enrolled agent to represent you in front of the IRS however she can only show that the deductions you took are legal deductions. It is up to you to prove that you had the right to take these deductions. She could work with you to see if you do or don’t have the right and work with the IRS for a settlement.