There’s Never a Good Time for an Audit

Written by: Arnold van Dyk, Esq.

Over the past year I dealt with a case that was somewhat difficult and unique, both because of the tax issues involved, as well as the personal issues that the members were going through.

The members were under audit for two separate years, and the case was initially assigned to one of our outside representatives in Texas. After the examination there were several adjustments, but the two largest ones were:

  1.  Almost $200,000 adjustment for underreporting income.
  2. Disallowing more than $100,000 for a theft loss deduction the members claimed on their tax return.

A Notice of Deficiency was issued, with adjustments totaling nearly $150,000. This was the amount the I.R.S. was asking them to pay.

When I first spoke with the member, he was very concerned, and even asked me if he was looking at potential jail time. I tried to calm him down and asked him to give me an explanation of the two main issues on the Notice of Deficiency. He gave me the following explanation:

  1. For the underreported income, he had received “loan payments” from a very wealthy friend. All these funds were used in the course of the business. The problem the IRS examiner had was that there were no loan repayments occurring. The examiner believed that these funds had been received as payment for some type of goods or services.
  2. For the theft loss deduction, the member said he’d had gold bullion coins in excess of $100,000 that had been stolen. He did submit police reports, and had tried to establish the value of the coins from a guidebook of U.S. coins. But the examiner did not accept the taxpayer’s valuation because there were too many discrepancies in the description of the actual coins he claimed to have had.

We decided to file a petition with the Tax Court to dispute the claims, however, shortly after filing the petition, the member called me with some horrible news − he had been diagnosed with brain cancer. The doctors told him his prognosis was not good. I told him to focus on taking care of his health, and we would do our best to take care of the IRS issue for him.

After this call my interaction with the member was limited. I left him messages with status updates as needed, but I did not hear back from him. A few months later his wife called to let me know that he had passed away. She was somewhat distraught, obviously because of her husband’s passing, but also because she did not know how she could possibly pay the amount of money the IRS claimed she owed.

Fortunately, their case was assigned to a very sympathetic I.R.S. Appeals Officer. She looked at all the facts of the case and considered all the issues and arguments we had made on the issues. She removed the adjustment for the unreported income entirely, and allowed almost half of the theft loss deduction the members had claimed. This brought the final agreed upon settlement amount to less than $23,000 of tax due. The member’s wife was very happy and relieved. While the member was not able to share in this good news about the outcome, I hope he knows that we did everything in our power to help him and his family in this difficult situation. gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

My audit representative was fantastic! She is responsive, a very good communicator, and clearly understands the tax law. I would highly recommend her to anyone!

Patrick, Cumberland, RI


My audit representative was very patient and informative. I was 100% confident that she was well versed, experienced, and educated. I had no doubt that my audit from the IRS would be resolved correctly and to my best legal advantage. I felt as though she really cared about my tax audit, that I understand the process and reasons for the audit. She guided me through the process and was helpful in where to get the information that she needed to complete the audit process from our end. I could not have been more satisfied with her service, expertise, and professionalism.

Jeffrey, San Antonio, TX


My audit representative did an excellent job in replying to the inquiry from the State of Missouri Department of Revenue. In short order, she prepared the necessary documents to support the deductions claimed. The State quickly closed the case without any adjustments. I highly recommend the professionals at!!!!

James, Ballwin, MO


Easy to use, good service that gives peace of mind.

John, Oklahoma City, OK


Everyone was courteous and professional. My audit representative was polite, professional, and reassuring. I will continue using Turbo Tax and include Audit Defense on future tax returns. This was (albeit brief) an awesome experience. Thank you.

Phyllis, Aldan, PA


Having somebody to represent me from a tax audit is very stress relieving knowing that everything will be settled, done in a timely manner, and in a professional way! Thank you for all your help!!!

Jennifer, Carlisle, PA


I could not have been more pleased with the service and responsiveness of your representatives. This is a most professionally provided service and well worth the annual fee.

William, Minnesott Beach, NC


I’m so thankful for Any questions we had were answered, our concerns were addressed, and all along I had the ease of knowing that in the end we would do the best we could given that we had qualified representation. Well worth the money. It was so hassle-free I was completely amazed.

Brian, Houston, TX


Our audit representative was great. All of our audit issues were resolved without a hitch.

Mark, Santa Ana, CA


TaxAudit has eliminated the anxiety I once felt about dealing with the IRS or State agencies. I would NEVER be without TaxAudit. It just might me the best money I have ever spent. Thank you TaxAudit. I no longer fear a letter from the IRS.

Sharon, Savoy, IL

Today was a Gentle Reminder of Why I Love my Job

Written by: Karen Luckart

My daily job can be routine and sometimes not so routine. Correspondence from the IRS can be unsettling, to say the least, for our members. Recently, a case came across my desk that was one of those “not so routine” cases. I was able to lend an ear to a person in need, and it made my day.

In the midst of making a series of routine first contact calls, I dialed a number to make an introduction. When a woman (our member) answered the phone, I was greeted with a shaken and broken tone. I introduced myself and explained why I was calling. The woman on the other end of the line began to cry. While reminding myself not to cross “that personal” line, I asked if everything was okay.

Normally, people are shaken up because of the unknown regarding the audit notice they have just received. But this was different. And then, just like that, out came a whole lifetime of moments and memories. The member, still crying, shared with me the loving life that she’d had with her “brilliant” husband. She described him in detail − what he looked like, what his voice sounded like. She told me how they had moved from their house by the beach to their house in the mountains because of his love for architecture. He’d enjoyed restoring houses to their former glory. As I listened, I could hear her smile as she described more details about their life together and the memories they’d shared.

As she continued with her story, her voice began to exude sadness and she started to cry once again. She described an urn that she was holding in her hands and explained that her husband had just passed away at the beginning of the month. She had just received his ashes about a half hour before I called. I apologized for my timing.

The member continued to talk, telling me about her husband’s cancer and untimely demise. She said the audit could not have happened at a worse time. I tried to think of something to say to her, something that we have been trained to say. But I had nothing; instead, I just listened. By the time she reached the end of her story, she seemed to be at peace. When I got off the phone with her, I had to get up and walk away from my desk.

Today, I could not be more grateful that I had the pleasure of being on the receiving end of this phone call. The woman just wanted someone to listen to her. It was a good reminder that when we pick up the phone, one hundred percent of the time, the person on the other end just wants to be heard. At times it is easy to forget to be personable because the calls and interactions can become somewhat routine. People can be frustrated, rude, or whatever the situation may be. And sometimes, on days like today, moments like this remind me of exactly why I love my job. gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

2013 was the first year I used TaxAudit. Because of my experience I will use it every year from now on.

Joseph, Alta Loma, CA


My audit representative was really great to work with. Even down to the fact that she adjusts her work hours on the west coast to accommodate clients on the east coast. I expected to work with someone that knew how to correct the problem and she certainly was that, but the part of the service that made me the happiest was the communication. Getting audited, even knowing that I was not wrong, is a stressful event and my representative kept me 100% in the loop, always accurately communicated next steps and always delivered on what she said. Her ‘bed- side manner’ was fantastic!

Adam, Reston, VA


Audits are extremely stressful and intimidating. Having an intelligent, compassionate audit rep relieved a lot of my stress and made it as easy as possible.

Melissa, Artesia, NM


My audit representative handled my case extremely well. The process took over a year to resolve and he did an excellent job keeping me abreast of the processes which were complicated and took over a year to resolve due to IRS work loads. I am extremely pleased with my experience with Tax and find it foolish not to have the protection afforded by paying for this service. I could have never navigated this myself with the IRS. Thank you!

Wayne, Beverly Hills, FL


How scary to get a letter from the IRS. Our audit support team walked us through every step of the way and we were able to provide all the required supporting documents. The day we got the letter stating no additional paperwork had been requested and the IRS had not made any changes to our refund we were over joyed. Our Audit support team was an excellent partner during this process and money well spent.

Tammie, Wartrace, TN


Saved me a ton of headache and thousands of dollars! Lots of peace of mind knowing someone qualified was fighting for me. My audit representative even fought them on the last $10 or so, which probably created extra work for him but he suggested we do it anyway. After I got off the phone with him today I signed up for the yearly plan so I know I’m covered in the future. Thanks for making this scary, pricey situation vanish.

Dennis, Brooklyn, NY


Signing up for the service was one of my best decisions. All I had to do after receiving a notice from the IRS was to provide documents requested by the TaxAudit personnel and she took care of everything else. I will continue to purchase this service when I file my tax returns.

Soonkyu, Fair Lawn, NJ


My local representative was extremely helpful and obtained excellent results with my audit.

David, Goodyear, AZ


This process was very well organized and professional. My audit team member was wonderful. She persisted with the IRS and got a resolution in my favor. Tax Audit worked so well I went back and purchased it for previous year’s taxes. Thanks again.

Victor, Suwanee, GA

California Jet Set

Written by: William Daly, CPA, EA, MST

A few months ago I received a “Check the Box” audit for a married couple living in one of California’s most famous wine regions. The IRS was questioning the large mortgage interest expense deduction on their Schedule A.

The members lived on a ten acre lot where their main home was situated. On this property there was also a farming activity as well as a residential real estate rental, which were both reported on the members’ income tax return.

The members had purchased the property with a $2.3 million interest-only mortgage. Of this amount, only the interest on the first $1.1 million would be deductible as a mortgage interest expense. Because of their high income levels, the members were also subject to the AMT. This meant that, among other things, the members would not benefit from the deduction of the real estate taxes on their large parcel of real estate.

The members had paid over $160,000 in mortgage interest and $25,000 in real estate taxes, but they were only able to deduct $63,000 of the mortgage interest expense due to the limitation. The remaining $122,000 was not being claimed anywhere else on the income tax return.

After speaking with the members at length, I learned that they leased out several acres of their land to grape growers who used it to cultivate grapes. They also explained that the lot had originally had only one home, and that they had constructed a new home on the property to live in, while the original home is rented out to a tenant. That was when I checked the tax return again and learned that the Schedule F and Schedule E had no mortgage interest or real estate expenses listed.

I advised the members that they should be allocating the interest expense and the real estate taxes among the farming activity, the residential real estate rental activity and the primary residence. I suggested that they use the real estate property tax bill to get an idea of the relative values of the land for the two residences, and I explained that any losses on both the farming and rental real estate activities would not be currently deductible, as these two activities would be considered passive losses. But the good news was that the gross income from these activities could be reduced to zero with the allocation of the mortgage interest and the real estate taxes, and any unused losses from these activities could be carried over to future years until the property was ultimately sold.

The members thanked me profusely for bringing my observations to their attention. Not only did their audit result in a “no change letter,” but they were thrilled that they would have the opportunity to file amended federal and California income tax returns for the open years, which would get them back a tremendous amount of money. This solution certainly paid for the great California wine that was used to toast the resolution! gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

A huge Thank-you to your amazing staff and especially my audit representative. She is a true professional and made my experience with tax great.

Thomas, Grandy, NC


After a few years of paying the ‘insurance’ to be represented in the event of an audit, I was audited by the IRS. I contacted TaxAudit and was guided through every step necessary to provide the appropriate information to the IRS to challenge their position. I recently received notice from the IRS that they agreed with me (i.e. TaxAudit) and the case was dropped…nothing due. The piece of mind provided so professionally by TaxAudit was deeply appreciated. Thank you!

Craig, Buffalo, MN


My audit representative was great! She worked so hard on my case. was so easy to use. She made the audit process painless. She did all of the communication with the IRS and was able to work with them to lessen the amount of tax I owed.

Karen, Brighton, MA


Everyone was very professional. They made a very stressful situation much better. My audit representative explained every thing with clarity. I felt assured that whatever the resolution it would be done correctly and with the best outcome. I recommend your service to everyone who uses Turbo Tax to do their taxes.

Carol, Graham, WA


I am very happy that I signed up for this service. This was my first audit in 53 years and it would have cost me had I not done so. I would have paid what the IRS requested but TaxAudit did not accept that and I ended up paying nothing!

David, Moraga, CA


I can’t begin to express how much I appreciate and our audit representative. When I received my IRS notice I was paralyzed by fear and worry. Once he was assigned to me I began to relax when I realized how competent he was and knew he was sincerely interested in helping me. Knowing my situation completely he continued to look for various ways to deal with notice and finally came up with a smart and clear idea that would satisfy the IRS and help them understand too. Yesterday, I received a “no change” letter from the IRS. Needless to say we owe addressing the complicated IRS notice and rules entirely to our audit representative and You are my heroes!

Jeffrey, Tustin, CA


I’m going to definitely recommend this to everybody that I know. I had a wonderful experience. My audit team was outstanding.

Tarryn, Jacksonville, FL


It was greatest help I could imagine. Exceptional service for a small price.

Kauser, Arverne, NY


Tax Audit did great. My frustrations are with the IRS that took a year to decide that my return was fine as filed. So glad I had your service to calm me down!

Patricia, Clearwater, FL was the best experience we ever had. They were prompt and efficient and know how to handle the case. We are very happy with the results and most of all, case was closed with no fees.

Ellen, Hillside, IL


The service was wonderful. I signed up again this year!

Brian, North Lawrence, NY


Will definitely be purchasing Tax Audit protection from TurboTax every year forward from now on. Well worth it.

John, Mystic, CT

Keeping It Simple Helps

Written by: Jonathan Crosby, EA

In August, I was assigned a case that was different from any other case I have ever worked. It was challenging in the way a serious jigsaw puzzling is challenging, and it required the same type of patience and commitment.

The IRS had sent out a soft notice in July asking our member for clarification of $626,842 in retirement distributions from 2012 that they couldn’t account for. After a review of the return I could understand their confusion. It turned out that the taxpayer’s son had been moving his mother’s retirement funds around in an effort to maximize the returns. The records showed $6,880,800 in distributions. The majority of the funds were re-characterized, and only $609,047 had been reported as income.

On further investigation and questioning, I learned that when the son prepared his mother’s return he had consolidated some of the thirty-seven transactions because the software program could only handle up to thirty transactions. The other issue that added to the challenge was that four of the re-characterized transactions had taken place in 2013 − within the required one year time frame − however, the IRS wasn’t able to connect the dots just by looking at the taxpayer’s 2012 return.

My first course of action was to understand, recreate, and validate what the son had done while preparing the return. I pulled the taxpayer’s transcript, which included seventy-two pages of transactions and multitudes of Form 1099-R Forms representing the distributions. The codes in box seven of the form were varied as well, from the common to the rarely seen:

  • Code 2 − Early Distribution Exception Applies
  • Code 7 − Normal Distribution
  • Code N − Re-characterizations IRA Contribution made for TY2012 and Re-characterized TY2012
  • Code T − Roth Distribution, Exception Applies
  • Code R − Re-characterizations IRA Contribution made for TY2012 and Re-characterized TY2013
  • Code Q − Qualified Roth IRA Distribution

After sorting through the various transactions I was able to paint a picture of what had transpired and connect the dots. But I still needed to recreate exactly what the taxpayer’s son had done in Turbo Tax.

Meanwhile, the taxpayer received a second notice showing an amount due of $74,931, which included penalties and interest. I knew the taxpayer didn’t owe this, I just needed to be able to explain what had happened in a manner that whoever reviewed the document s could understand.

Almost three months after my letter went out to the IRS, we received a response stating that the taxpayer owed the same amount listed on the original notice. Based on the reviewer’s notes, it was apparent that he or she didn’t understand what was in the response package. Not to be deterred, I got on the phone with an IRS Representative and went through the material I had sent, page by page. When we were finished he understood the situation and agreed to make the changes I requested.

The taxpayer received a “no change” notice in January, which means she owes the IRS nothing. Needless to say, both the taxpayer and her son are extremely relieved by the outcome and grateful for our service. And I am looking forward to my next puzzle. gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

My audit representative did an outstanding job handling my case. He was available when I needed to talk with him and very professional in how he handle our questions/concerns with this issue. He made what could have been a real bad experience a whole lot more pleasant and enjoyable if you can consider a tax audit enjoyable. Job Well Done!!

Wayne, Commerce Township, MI


My audit representative was great! He eased my anxieties and kept me informed throughout the process. I am very happy that I chose to purchase Audit Defense through Turbo Tax!

Amy, Reseda, CA


I am so glad that I had this service. I will always select it in the future.

Maria, San Leandro, CA


I am thankful for the professional, courteous, supportive handling of this audit.

Ronald, Minneapolis, MN


I decided to use Tax Audit because it was offered through Turbo Tax. I had no idea I would be audited, but my audit representative did a fantastic job and I will definitely be signing up for your protection for my future returns.

Stephen, Charlotte, NC


I don’t normally provide perfect reviews but in this case it is well deserved. The entire tax audit team provided prompt and professional service throughout the audit process. It turned a frightening experience into an easy one. I’ve subscribed since 2002 and definitely recommend your service to others!

Louis, White Plains, MD


I was panicked when I received the notice. From my first conversation with the coordinator I was calmer than I thought I could be. I was VERY grateful to have the audit support. My audit representative knew what to do, what to say to help me understand the process. Thank you.

Janet, Tucson, AZ


I was very worried at the beginning that my tax assessment will be a big headache but the made it easy for me all the way. It was an excellent experience that I would not hesitate to recommend to all my friends.

Antero, Norwalk, CA


It was worth Way More than what I paid for the service. I am very pleased.

Michael, Santa Rosa, CA


The peace of mind, having the audit handled for us is worth purchasing every year. All the information requests were clear and easy to upload. Having the IRS visit done by a professional had a better outcome than we may have had trying it on our own.

Peter, Glen Ellen, CA


We are so thankful for TaxAudit. Our audit representative is an excellent professional who walked us through the process with ease. She was extremely attentive to detail and guided us diligently. She is consistent yet not cold, and very well focused on the target issues. We wouldn’t know what to do without her help. We commend her highly with confidence to represent anyone who’s faced with a tax audit. Please continue your excellent service.

Maria, Winston Salem, NC

Truck Driving Man

Written by: Chuck Long, EA

Often when assigned new cases, we find members who have made what initially appear to be insignificant errors and end up owing substantial amounts of tax. These errors are sometimes due to procrastination, misstatement, or incomplete understanding of the tax law, and the amounts owed can be staggering.

Our member was a truck driver who worked for a trucking company whose compensation payments were arranged by a third party. The drivers were issued debit cards which could be used to pay their “over the road expenses” (i.e. fuel, maintenance, scales, towing, etc.). The cards were refilled by the company with the drivers’ compensation and were used in lieu of a paycheck. Also subtracted from the debit card and the drivers’ gross compensation were the lease payments for the truck tractors. With this system the drivers do not have to carry cash and the record keeping for their income and expenses are all reported on one statement.

The system seemed like a great idea until the member decided to assign his tractor lease to another truck driver. Due to litigation the assignee was involved in, the member was unable transfer the vehicle into his name. The member agreed to allow the assignee to drive the truck without transferring the lease or getting the debit card for the vehicle switched to the new driver’s Social Security Number.

The member procrastinated, and even after the new driver’s legal problems were settled the lease was never assigned and the debit card never transferred. The result of this was that the member received a 1099-MISC showing $49,646 of additional income that had been paid to the new driver. The member did not issue a 1099-MISC to the new driver and received an IRS notice stating that he owed $17,775 of additional tax and interest, including a “Substantial Understatement” penalty. The member was surprised by the additional tax and didn’t recall receiving the additional 1099-MISC form.

The member contacted the new driver, who was forthright about the amount being his income. But a year and a half after the fact seemed to be too late for the member to report the income and issue a belated 1099-MISC. The member contacted the debit card company that had issued the 1099-MISC, and while they promised to research the matter they said it would be several weeks before they could trace the income and determine to whom the credits had been issued.

After discussing this case with my colleagues, we decided the best way to proceed would be to respond to the notice by explaining the circumstances. This would hopefully by time so the debit card company could complete its investigation. Meanwhile, sending a response to the IRS would make it less likely that they would close the case.

Due to the member’s occupation as a long haul trucker, it was difficult at times to keep him focused on getting the necessary documents together and staying in touch with the debit card company to make sure they completed their investigation. Fortunately, the member was tenacious enough that we were able to get the necessary documentation and respond to the notice.

While I never heard whether the debit card company ever finished its investigation, the point became moot when we received the notice from the IRS changing the amount owed from $17,775 to a refund due of $237. Our member was thrilled that our joint efforts had garnered such a favorable outcome. gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

My audit representative was very calm and reassuring which kept me from panicking. I was very comfortable leaving this matter in her capable hands. I am extremely grateful for her expertise and professionalism.

Gail, South Boston, MA


Being audited for the first time and dealing with the IRS was a scary experience. My audit representative provided us with the templates and expert advice and experience to create professional quality reports needed for the audit. Thank you so much for the assistance. Look forward to working with TaxAudit.Com if we ever need more assistance.

Michael, Tuttle, OK


My audit representative saved the day, and saved me over $20k. He was extraordinarily professional and courteous despite my blatant ignorance of tax forms. My taxes were complicated and his analysis of all the tax filings determined my mistake and led him to a solution; further, he explained this solution very simply and thoroughly line by line on the forms. He was always kind enough to help me understand each change and never made me feel inferior for my mistakes. He was persistent with the IRS about changes that he had to explain to them several times. Ultimately, the IRS owes me $189 after all of this – I couldn’t have asked for a better and more smooth outcome. I will be a customer for life and will be telling all my friends whenever the IRS comes up in discussion. Thank you!

Bradley, Tucson, AZ


I was pleasantly surprised with the level of attention and the quality response that I received. Excellent value. It is not something that I have frequently experienced when dealing with other service providers in any field. Thank You.

Edwin, Tampa, FL


I’m very satisfied with the audit defense. My audit representative was very professional, helped me understand the whole process, and was very polite. He is a very valuable person, I am very satisfied with his work, and will recommend Tax Audit to my friends.

Luis, Port Saint Lucie, FL


I’m very thankful that I chose TaxAudit. I couldn’t imagine going through an IRS audit without such professional representation.

Paul, Christiansburg, VA


This experience has surpassed my expectations. Everyone I dealt with was so professional. I was kept informed throughout the entire process, and the tax representative was amazing. He is the best. Overall, I was completely satisfied.

Annette, Cumming, GA


Worth every penny. I have used this service every time I use TurboTax!

Francois-Michel, Washington, DC


Your service was fast, effective, and absolutely professional in all respects. Any concerns we had after being contacted by the IRS were dissipated immediately after our initial contact with TaxAudit. Thank you!!!

Theodore, Claymont, DE

Stupid Criminal Tricks

Written by: Carolyn Richardson, EA

Most clients find out they have been the victim of return identity theft when they receive a notice from the IRS or a charge from a credit card company, but in a recent case one client found out he’d been the victim of identity theft when he got a check – a check that was supposed to go to the ID thief.

Our member filed his return for 2012 in a timely manner and asked that the IRS debit his bank account for balance due. A few weeks later, he received a check in the mail for about $7,500 from TurboTax’s third party processor with the explanation that they could not deposit it directly to his account as asked. The member had never heard of the processor and thought the check was some sort of scam so he just held on to it. In September he realized the IRS had never removed his balance due from his account, so he called TurboTax for an explanation. That’s when he found out that the return transmitted by TurboTax to the IRS wasn’t the one he had prepared and thought he’d filed. Fortunately, he had audit defense so he called us to ask what he should do now that his own return was officially late.

The IRS instructed us to have the member return the check back to TurboTax and have TurboTax write a new check to the IRS noting the taxpayers name, SSN and tax year on it, and to mail in a filed return with the payment due. The member mailed us a signed return with a check for the correct balance due, and we mailed it in with a letter explaining what had happened, along with a copy of the check from TurboTax. We requested that the IRS flag the taxpayer’s account for ID theft, process the mailed return and payment, and apply the TurboTax check back to the taxpayer’s account to wipe out the refund.

From there, things went downhill. The IRS received both checks and the tax return, and the checks were cashed. But they did not apply the TurboTax return to the taxpayer’s account, despite the fact that the name and SSN were on the check memo. The IRS reversed the fraudulent taxes and withholding and assessed the correct taxes and withholding and payments, which left the taxpayer’s account with a balance due in the amount of the ID thief’s refund amount.

In February, the IRS started issuing erroneous refund notices to the taxpayer, demanding repayment, which we replied to twice showing that the TurboTax check had cleared the Fresno service center the previous October. Calls to the practitioner priority line were fruitless, as they said that the ID theft unit had the case and would eventually get the payments sorted out. In the meantime, the member also started receiving scam phone calls from someone pretending to be the IRS, which we told him to ignore. When the IRS issued a notice of intent to levy – despite our being told just three weeks previously that the account was frozen – we called again. This time practitioner priority was able to see that the check was in a temporary account for some reason, and they referred us over to the ID theft unit directly. The ID theft unit couldn’t see the temporary account, but agreed to put a “hard trace” on the TurboTax check to find the payment.

Approximately a month later, practitioner priority confirmed that they had found the check and applied it to the taxpayer’s account. There was still a small balance due because of processing fees TurboTax had not returned to the IRS, but the taxpayer paid those immediately and TurboTax refunded that amount to him. It only took a year plus one month to clear up the problem, caused by the taxpayer being honest and wanting to return the fraudulent check to the IRS. Thus proving that no good deed goes unpunished. gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

As painful and soul searching as it is when you receive an audit notification, the audit itself went smoothly with the help of

Alicia, Santa Ana, CA


Excellent and well worth the annual fee from Turbo Tax. Managed the process, kept us on track and provided helpful advice. We had never experience an audit and were very nervous but our audit representative took away all the stress and fear.

Jay, Manhattan Beach, CA


I am so glad that I decided to purchase TaxAudit protection when I filed my return. Even though I had never been audited, and was sure there was no reason I would be – sure enough it happened. The service and support from TaxAudit was excellent. One of the best decisions I ever made. Thanks!

Clinton, Cary, NC


I must admit when contacted by the IRS I was a little nervous, but when I contacted Tax Audit I immediately felt I could relax. My coordinator and representative made it very easy by thoroughly explaining each step I must do. I’m not a real wizard on the computer but my audit representative was so patient with me, and put me at ease with her kindness and keeping me informed of each step that was coming. On the first submission the IRS came back with me owing around $1,100 and I was all set to send in a check but my audit representative said that wasn’t acceptable. She gave me a couple of suggestions and resubmitted the claim to which a no change to the original tax return came through, which saved me that $1,100 dollars.

Janet, Kalamazoo, MI


I received IRS notice stating I need to pay $9000 regarding retirement income reported in K1 and few other misc items. I was scared and without tax audit’s help I’d have just paid that amount. With timely, courteous, and professional help and knowing they are there to support I got that erased and instead filed an amendment resulting in $7887 refund to me. I can’t imaging filing my taxes without purchasing TaxAudit in future.

Neha, Fremont, CA


My audit representative was extremely helpful and responsive throughout the process. My experience was very favorable, and I intend to share this with others and include Tax Audit support on future returns.

Kevin, Mulberry, FL


My 2010 taxes were audited by the IRS, who claimed my monthly retirement checks was income from being self-employed. It took me 18 months to resolve the issue alone, and without a clear-cut disposition. Then in September 2014, the same issue arose again on my 2012 tax return. This time I called on the experts at for help, who acted on my behalf without me dealing face-to-face with the IRS. In early December I received a written notice from the IRS stating,”… the information you provided resolved the tax issue in question and that our inquiry is now CLOSED (emphasis added by me). Amount due: $0.00.” I am grateful to the team for the efficient and professional manner in which they removed the tremendous potentially financial and emotional burden that my wife and I were carrying. Thanks, team!

Lawrence, Reedville, VA


No one likes an audit, but I really felt my needs were well taken care of. My audit representative did a great job of guiding me through step by step. I was informed throughout the whole process, and was very satisfied with the services provided.

David, Grand Junction, CO


Not only did my audit representative help us resolve with a favorable finding, he was able to reduce our monetary load by convincing the agent to eliminate penalties. And he made suggestion for future accounting and filing procedures to reduce potential issues.

Gene, Custer, SD


This has been a great experience. Their professionalism and competence made this experience extremely easy to handle. My most sincere thanks to them and to TaxAudit, I will continue to sign-up for your audit protection on all my future filings!

Daniel, Southern Pines, NC

Hard Act to Follow

Written by: Jonathan Crosby, EA

I received a new case in July. It was your typical Letter 566 exam questioning the member’s Employee Business Expenses. I did a quick review of the return and learned that the member had reported ten W2’s for income of $5,338, which seemed quite low compared to the $20,098 that he’d reported as unreimbursed employee expenses on his Form 2106. I knew this was going to be an interesting story.

During the initial call I discovered that the member was retired and trying to break into acting. He explained how he had to go to all these auditions, 21,635 vehicle miles worth, while also incurring additional expenses such as office supplies, pictures, dues etc. He also told me that most of the expenses listed on the return were estimated, and there were no receipts. Any receipts that he did have had been lost in a flood. As we discussed his ten various acting jobs, some of which didn’t pay more than $46, I began to formulate a strategy. Based on the member’s income level, I knew he wouldn’t qualify for the “starving artist deduction,” which allows for an above the line deduction for “certain business expenses of performing artists.” In fact, these expenses were not actually unreimbursed employee expenses associated with any of the ten various employers, but rather job search expenses associated with the procurement of those 10 acting gigs.

I immediately got the member to start recreating his mileage log, obtaining third party verification, and digging up any receipts he could find to validate some of his expenses. I also asked him to put together a statement attesting to the loss of records with any specifics he could provide about the flood. Weekly phone calls to keep up the momentum finally paid off when on September 15, 2014, I was able to send out the response, and then again on November 10, 2014, when the IRS sent the letter 3581 announcing that they did not make any changes to the tax reported on the original return. We won the case, and the member was thrilled. gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

“Very satisfied” doesn’t say half of the gratitude I feel toward The IRS made a mistake, and I was freaked out. Your people were solid and professional, and once I knew my IRS problems were in good hands I calmed down and got on with my life. The resolution was in my favor. I have engaged an accountant now, but I will still engage TaxAudit just in case! Thank you so much for everything.

Janice, Westlake, OH


My audit representative and her team made the process as easy and pleasant as could be. Learning that one is being audited is very stressful no matter how confident one is about the filing process. My audit representative was professional, courteous and friendly throughout the prolonged (on the IRS side) process. Her confidence was contagious! I hope that I will not need your assistance in the future but if I am I hope that my audit representative will be there to assist me. I am so glad I purchased Audit Defense and will continue to do so in the future. Thank you all. Happy Thanksgiving!

Shepard, Branford, CT


My audit representative provided timely status updates and was patient in explaining process for providing the additional records I needed. This was a great service when any dreaded IRS notice arrives.

Clarence, Las Vegas, NV


Anyone that receives a letter from the IRS can probably identify with the feeling of dread I felt. I had never received one before. I reached out to Tax Audit and they took care of me every step of the way. The process was smooth, understandable and thorough. I have had the service for years and will continue to use Tax Audit. It put my mind at ease and helped me deal with what could have been a serious situation! Go Tax Audit!!

Andrew, Liberty, SC


Having an audit can be a daunting task. However, with the support of TaxAudit, the process went smoothly and was resolved quickly. Best of all I owed no taxes!

Bill, New Braunfels, TX


I am very pleased with the services of Audit Defense. I have enrolled for about 5 years, and this is the first time I have needed their services. After receiving IRS notice in the mail that I owed money from tax return filed over two years ago, I was distraught. Then, I recalled I had signed up for Audit Defense and contacted them immediately. They walked me through documents they would need, and once I provided, they took it from there, and within a little over a week, they figured out stock sales had not been reported to the IRS properly by my banking institution, and in the end, I should be getting a small refund, vice paying several thousand dollars more to the IRS. I am 100% satisfied with Audit Defense, and this one incident sold me on protecting myself in the future with their services.

Jack, Southern Pines, NC


I would give the service I received a 5 star rating.

Daniel, Opa Locka, FL


You have made this experience bearable and less stressful. Don’t know what I would have done without your assistance. Exceptional professionalism and customer service.

Mary, Upper Marlboro, MD

Our 10 Million Dollar Tax Notice

Written by: Sherry Board, EA

This is an older case, but I wanted to share the story because I believe it is the largest dollar amount we have ever “saved” a member here at It was August of 2006 when our member received a notice for a proposed balance due of $10.3 million. He had traded and sold precious metals and gems during the year, and there were hundreds of transactions. But when he prepared his tax return he reported all of the hundreds of transactions as a single line item on his Schedule D form instead of reporting each transaction individually. All of the items were listed on his broker statements, but he did not send the statements in with this tax return when he filed because he was unaware that this is what is required by the IRS when you combine multiple transactions into one line item on your tax return. The IRS could not match up what was reported to them by the brokers with what the member had entered on his tax return, and the computer-generated CP2000 notice for $10.3 million in unreported income was the result.

We spent hours working with the member and double-checking the excel spreadsheet he prepared with the hundreds of transactions from the broker statement. Finally, we came up with the correct amounts of securities sales and net proceeds. We submitted our response to the IRS in hopes of getting a favorable response. A month and a half later we received a recomputed notice with a balance due of approximately $6,700, which included penalty and interest.

The member was very thankful for our services. He sent us a huge box of Harry and David goodies that we enjoyed for months. gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

This was my first time actually using the audit defense though I have purchased it in the past. From the beginning, the staff at TaxAudit were extremely helpful. They let me know exactly what I needed to send them and how to acquire the documents I needed. Every question that I had was always answered in a manner that I understood, quickly and conveniently. I don’t plan on being audited again for a little while, but you can be sure that if I do, I know that I will have the people at TaxAudit to help me out. Thank you very much for all your help!!

Ryan, Middle Island, NY


I wish to thank for making this process smooth and as painless as possible.

Ivan, Lincoln, NE


Dung T was an amazing and calming advocate I would always want in my corner. gave me a stress free process I will recommend to friends and colleagues again and again.

Awam, New York, NY


I could not have made it through this ordeal without the kind and professional manner in which my audit representative assisted me. His knowledge as well as his patience were beyond my expectations. Thank you!

Carol, Millington, TN


Our audit rep was OUTSTANDING. He did a great job. Kept us informed and gave us peace of mind during the audit.

Cris, Temecula, CA


It was good to have an expert to deal with the IRS.

Arthur, Washington DC


My audit representative was terrific from start to finish. She really walked me through the process and made me feel like she was working for me to bring about a positive result. I would not hesitate to recommend Tax Audit service to my friends and family. I felt like I had a whole team of professionals working for me and all for such a reasonable fee. Thank you.

Donald, Brooklyn, NY


Never happy to see an IRS audit letter in the mail; but extremely happy to know that add-on to the Turbo Tax process was indeed a legitimate and value-added purchase. Will be sleeping better for many returns to come. Thank you!

Terry, Ennis, TX


This was my first experience, and the manner in which it was handled was outstanding. I will continue using TurboTax and purchasing the Tax Defense service as in the past.

Miro, Taylors, SC


It was like working through a problem with a friend instead of how the IRS makes you feel like a criminal. I highly recommend using the service. I have never received more one on one personal service from anyone even face to face. THANK YOU!!!

Robert, Union, OH


I wanted to cry when I got the letter from the IRS saying a owed a ton of money. But thanks to the team at tax audit, I got money back instead! Pleasant experience working with my coordinator and representative. I’ll always be a fan of

Anthony, Wappingers Falls, NY

This Month’s Champions

Written by: Donna Masciovecchio, Membership Services Manager

Here are the “core values” stories from the final group of Membership Services Representatives, Team Diamonds. Each shows a commitment to providing our members with the very best customer service available while treating them with empathy and respect during a very stressful situation.

April Arseneau

There have been so many times when I have gone above and beyond to make sure that the person I am helping receives everything I have to offer them. I do my best every day to provide a level of customer service that I would expect from a company. That is exactly how I think of it… What would I want from the person who is helping me on the phone?

I use the knowledge and skills that I have to provide the best customer service to every person I speak with, whether it is an external customer or an internal peer. So, with that being said…

Every day I try to be a champion, to commit, have empathy, to service, have respect, provide knowledge, and do it all with integrity.

Every day I am the best champion I can be for!!!

Tanya Turner

I always try to exercise empathy, respect, and integrity, not just at work but in everyday life. In August I received this feedback from a customer:

“She was very professional, courteous, and clearly explained the process to me. She is one of those rare people who have the ability to develop an immediate connection with people who are in a stressful situation. As a retired VP of a Fortune 500 company, I would hire her in a heartbeat − any company would be fortunate to have her in their workforce. I say this knowing that I have nothing to gain other that the satisfaction of recognizing superior service from her this morning − which just happens to be my birthday (guess this is the IRS’ idea of a birthday greeting.)”

I don’t agree that I am a “rare” person. I just simply believe in the saying, “Treat people how YOU want to be treated.” For me that means I treat others with compassion, respect, and FAIRNESS.

Keeping these traits and qualities in mind when dealing with customers, ANYONE, can be a “rare” individual.

Haley McClellan is not only a company that provides a sigh of relief to our members by defending them against the IRS, but we are each individual champions at ensuring our members feel at peace and have a clear understanding that we are here to serve them. We all utilize strengths, such as COMMITMENT, RESPECT, and KNOWLEDGE, but for me this last tax season, my greatest accomplishment was implementing EMPATHY.

It’s important to me to step outside of my “box” and place myself in the member’s shoes, especially when answering questions like, “Do I have to talk to the IRS?” and “Should I be worried?” It’s easy for us to take for granted that we aren’t personally experiencing what the member is going through, but we should remember that they are calling us to bring us into their situation to be a part of the resolution.

One member I helped was in a huge panic, and just providing words of affirmation and compassion and ensuring that we are here to help by dealing with the IRS on her behalf was enough to make her feel much better. She responded to our survey with this comment:

“Thank you for what Haley and all you folks do. For those of us who honestly file a return and live in fear of being bullied by the IRS, Haley and the folks gave a new meaning to getting a good night sleep. God Bless You All.” gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

I could not be more happy and impressed with the service I received from Audit Defense from outset to completion, my Audit Representative was professional, reassuring, efficient, compassionate, timely and very patient.

Raafat, Nottingham, MD


Purchasing was a great decision and worth every penny! I will continue to buy it every year when I complete my tax return using TurboTax and have recommended it many times to my friends and coworkers. I am a CPA myself, but I don’t know if I would have had the expertise or experience to have successfully resolved my tax audit as well as my Audit Representative. He was a pleasure to work, responsive, diligent and extremely effective. Thank you!!

Richard, Duluth, GA


My audit representative was extremely patient with me and he provided a high level of expertise. He helped me to understand all the issues and guided me through the process in a way that was professional and straightforward.

Stephen, Hacienda Heights, CA


Great experience overall! I was very impressed with your website security, and it was easy to upload documents and communicate with my audit representative.

Ronald, Highland Village, TX


I had a great experience with TaxAudit. I will definitely continue to purchase it with my return each year and recommend it to my friends.

Chrystal, Escondido, CA


I used Turbo Tax and by a hunch I decided to purchase your IRS audit help, because I was uneasy about my return. Boy was I right, for the nominal price I paid for your protection, I have saved thousands of dollars, and the expense of hiring my own tax lawyer! Having your service certainly saved a few months of stress and sleepless nights. But most importantly, I did not have to deal with IRS officials! I would not leave home without it!

Jane, Tucson, AZ


I was extremely impressed and satisfied with all aspects of my experiences with Tax Audit. My audit representative was nothing short of a true professional and amiable person throughout the whole process. I would recommend your service to anyone. Thanks again for such a wonderful experience on what could be a difficult time for the normal person.

James, Brandon, FL


I’m very glad I signed up for this service. Although this was not a difficult situation, I would not have been able to handle it without

Kenneth, Scottsdale, AZ


My audit representative was absolutely wonderful. From day one, I felt such a burden lifted since I have never been through an audit. She was professional, kind, friendly and eager to assist. She returned phone calls promptly, and when I was not available she left detailed messages…mostly not to worry…I would absolutely recommend tax audit, I hope all are as good as my audit representative. I will never file a return without purchasing this peace of mind protection…its a bargain….I hope I don’t need your services again but just in case I will be covered.

Richard, Colonia, NJ


My situation was somewhat complex. Throughout the audit, my team provided clear instructions and good guidance. I felt the team was always looking out for my best interests and were very good at working with the IRS.

Steven, Granite Bay, CA


Thank heaven for TaxAudit! It was such a comfort to have such efficient, competent, professional assistance. I will continue to purchase TaxAudit coverage every year.

Susan, Oxford, MS


The tax specialist that assisted me was tremendous! A+ Best in class performance all around. Thank you!

Charles, Cerritos, CA


Working with my audit representative was a pleasure. IRS notifications are scary to receive and my audit representative was reassuring and very knowledgeable in handling not only the process but effectively communicated to me on what was necessary to to be successful during the audit. Thank you for your help.

Joshua, Hoschton, GA

We Are Champions

Written by: Donna Masciovecchio, Membership Services Manager

Here are more stories about how our Membership Services Representatives put our company’s core values into practice each day as they work tirelessly to reduce our members’ anxiety during one of the most stressful experiences of their lives.

Joanna Michaelson


One of our Membership Services Reps had a frustrated member on the line. The member had received a notice for the 2012 tax year and thought he had purchased a 2012 Audit Defense membership, but he could not log into the website to view his memberships and find out for sure. He was getting more and more frustrated, and finally the MSR transferred the member over to me after trying to help him for close to thirty minutes.

After letting the member vent for a few minutes, I explained what I was going to do to help him. I did a search for more accounts and found that he had purchased memberships for all years dating back to 2005 − except 2007 and 2012. I provided him with his account number and waited for him to log into his account. He viewed his memberships but didn’t understand why he didn’t see his 2012 Audit Defense membership.

I said I would do some research with Intuit and let him know the results. He asked that I leave a detailed message because he usually was in class during the day. Then I explained the letter evaluation process, just in case he did not have a 2012 membership, and offered to send an email with more details. He was so appreciative that I had taken the time to help him log in and explain the process.

He said that he was okay with purchasing the letter evaluation, but wanted to make sure that all efforts were made to locate the 2012 membership if he had in fact purchased one. He thanked me again for explaining the process and taking the time to help him log into the website; he was happy that I hadn’t tried to get him off of the phone as fast as possible. He wanted assurances that I would not forget about him, and I let him know that I had already set a reminder to call him back the following day − whether or not I’d heard back from Inuit − just to let him know that I was still working on it. As it turned out, the member had not purchased the 2012 Audit Defense membership. As promised, I called and left a detailed message, and he did end up purchasing a letter evaluation in the end.

It was a stressful time for the member, and each step of the way I explained what I was going to do for him, and then I made good on my promises. This calmed him down every time.

Tina Barreiro


Last year I was a champion by using Empathy to reassure our members that they won’t have to face the IRS alone. I let them know that I understand and we are there to help. This year there have been an unusually high number of scammers trying to take advantage of our members and falsely threatening them with jail or deportation, so empathy has been of particular importance.

When I get one of these calls, even though I know it is probably a scam, I can’t just tell the member that, but I make sure I let them know that I will get them to someone that can answer all their questions. I calm them down by letting them know that it is not common for the IRS to call and definitely not common that they would send an officer to arrest them. I make sure to explain that the IRS normally contacts people by mail and that they have a process that they follow and not to worry because everyone has the right to be represented.

At that point I usually hear a sigh of relief and know that I did what was right for the member. They feel better because they know we have experience and know that we will be there throughout the whole process. Here are one of our member’s words from the survey: “Extremely professional and calming. Made me feel the situation was under control.”

Brandi Reid

Strength of Character

I had a call in the call back queue for a member. I asked for her name when someone answered, and the member came on the line. The call disconnected after she said only a few words.

Since the call came from the automatic call back queue, I had no information about the person I spoke with. I went to Ezra, our Lead of the Day, and asked if there was any way he could retrieve her information so I could call her back. It took him a little while to research it, but after about twenty minutes he emailed me her info and I called her back. She was surprised and pleased that I had made the effort to find and contact her.

Knowledge: Never Stop Learning

Recently I completed a California Tax Education Council Qualifying Tax Education Course so that I can be more knowledgeable when speaking with our members. gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

Absolutely superior response, highest professional service, communication, and results. I will continue annual renewal of this service and highly recommend it to everyone using TurboTax.

Bruce, Abbeville, SC


After having gone through an intense IRS audit, I can imagine going it alone. I have had TaxAudit as my fallback since 2009, and will never be without them. There aren’t words to express how grateful I am to the team that handled my ’10 & ’11 audit. Fantastic…and we could sleep at night throughout the process knowing we were being well represented.

Gary, Edgewood, KY


My audit representative was very helpful and asked all the right questions that got us to a fully satisfactory resolution of my problem. Saved me from a huge tax bill due to an IRS error. He knew just how to document the case so that it went away. Ultimate bill was $0 :-)

Glenn, Annapolis, MD


My audit representative is a consummate professional who, from the very beginning of the case, allayed my fears of responding to the IRS. She made the process almost effortless and was always there for me. I would recommend your TaxAudit service, and already have, to my friends and family. The value of your service and peace of mind that you offer outweigh the modest fee. More importantly, it is reassuring to know that technical issues are being handled by a pro. Thank you. Thank you. Thank you.

Marvin, Glendale, NY


I appreciate everything my audit representative did for me throughout this entire process. He explained everything thoroughly and can certainly speak the language to the IRS to resolve my issue in a timely manner. I highly recommend my audit representative, he is certainly an asset to your company. Thanks Tax Audit.

John, Metairie, LA


I plan to keep Tax Audit for all my returns and to recommend it to others. I was surprised and a bit scared when I got a notice in 2014 that the Commonwealth of Virginia said I owed additional money for 2010. It had been a complicated filing with returns in both Indiana and Virginia. With one call to Tax Audit, I was reassured. They handled everything and kept me informed every step of the way. Not only did the audit show that I didn’t owe VA money; it showed they owed me money. Having Tax Audit allowed me to be comfortable that my interests would be looked after. Without Tax Audit, I would have just been afraid and would have paid the amount of money requested, thinking I had made a mistake on my return. This saved me hundreds of dollars.

Alice, Winchester, VA


I was very pleased with the prompt service from beginning to end of case. I felt at ease knowing my case was handled by such a professional. I’d highly recommend this service. Thank you.

Jacqueline, Windsor Mill, MD


Our tax rep. was extremely professional in all interactions and he was very prompt in getting back to us when we had questions. I would have to say that from day one we felt comfortable with his level of expertise, his guidance and knowledge, and very supported throughout the whole auditing process. Really, we could not have better service than that we received. We often spoke of how lucky we were to get him as a tax audit helper. I would say, given the stress level that we imagine most folks go through when audited by the IRS, that it would be hard to find an auditor who could ease a clients mind and at the same time be open/honest and matter of fact as our tax rep. was.

John, Santa Rosa, CA


We could not have been happier with the service and results. It gave us a great amount of peace of mind knowing we had someone who knew the ropes. I will not be without this service.

John, Virginia Beach, VA


We were so worried about this audit but the “team” at TaxAudit made it so much easy for us. Our audit representative was outstanding!! He was thorough, knowledgeable, answered our questions quickly, took our phone calls when we were worried, and made the process as painless as it could have been. I just hope if we have another audit, we can have him help us again!! Thank you for having such qualified people for helping folks like us.

Barbara, Galveston, TX


When I found that I was being audited, I tried to log on to your website but was unable to do so. I sent an email stating that I was being audited and needed to log on. I figured that you would get back to me in a day or so. Within 5 minutes someone was calling me and giving me the necessary information I needed to get started. I was so relieved. Everyone I worked with was so helpful. Thank you for all your help.

Gregory, Elkhorn City, KY