Ignoring a Court Order

Written by: Darin C. James, Esq.

It’s not often that a taxpayer can disregard a court order, but a recent audit showed one of those rare instances. The IRS audited our members on the issue of the four dependents claimed on their tax return. Our members had claimed their divorced daughter and her three children, who had lived with them for the entire year.

We sent the IRS documents proving the relationship and residence of the dependents, along with the expenses our members paid to support the extended family. Surprisingly, the examiner disallowed all four of the dependents. The explanation in the examiner’s report said that another taxpayer had claimed the same dependents. The examiner also asked for a complete copy of the daughter’s divorce order. Our members then told me that their daughter’s ex-husband must have claimed his two children. We had a copy of the court order that granted the daughter’s divorce, but not the written agreement that accompanied it.

I wrote to the examiner arguing that the children could only be claimed by the parent or grandparents with whom they lived the majority of the year, unless the custodial parent had signed a release. Our members said their daughter had not signed a release to allow the noncustodial father to claim his children as dependents. The daughter had no income and did not file a tax return. Therefore, the “tie-breaker rules” would allow the grandparents to claim the children, because the mother did not claim them, and the grandparents’ income was higher than the mother’s.

The examiner was not persuaded, and still disallowed all of the dependents. After our members received a Notice of Deficiency, we filed a petition in the U.S. Tax Court. I later discussed the case with an Appeals Officer, who offered to allow two of the dependent exemptions for the daughter and third grandchild (who was not from the daughter’s marriage). The Appeals Officer said that since the daughter’s complete divorce order was not provided, she assumed that it allowed the father to claim his two children.

Our members obtained a copy of their daughter’s entire divorce order and sent it to us. The order incorporated this written agreement between the parents: “(Father) shall be entitled to claim both minor children on his state and federal income tax returns every calendar year. If (Mother) qualifies for an exemption due to her income increasing, the parties agree to each claim one….” The agreement was signed by both parents and approved by the judge.

We sent the divorce order to the Appeals Officer. I argued that the order should not control the case because the daughter did not sign IRS Form 8332 releasing the exemptions for the children. The Appeals Officer disagreed. She said that when both parents have signed an unconditional stipulation, they consider the stipulation to be the equivalent of the required declaration in the form. She asked me to send her whatever legal authority we had to support the taxpayers’ position.

Between divorced parents, the general rule is that a child can be claimed as a dependent by the parent with whom the child lived the longest during the year. Internal Revenue Code §152(e) creates an exception to this rule by permitting a noncustodial parent to claim the dependency exemption if certain requirements are met. However, this section only applies “if a child receives over one-half of the child’s support during the calendar year from the child’s parents.” Our members had a report showing that the children’s father had paid only a very small amount of child support that year. The children’s mother had no income, so the grandparents provided most of the support.

In George v. Commissioner [1], the Tax Court held “If a third party (not the child or her parents) provides most of a child’s support, then – notwithstanding a purported release by the custodial parent under section 152(e) – a noncustodial parent could not claim her as a dependent.” In another recent case, Shenk v. Commissioner [2], the Tax Court held that even though a noncustodial parent may be entitled to a disputed dependency exemption as far as a state court is concerned, “ultimately it is the Internal Revenue Code and not State court orders that determine one’s eligibility to claim a deduction for Federal income tax purposes.”

I wrote to the Appeals Officer again, citing the case law and applicable sections of the code. The IRS finally agreed that that the divorce order did not control, because the order conflicted with the Internal Revenue Code. Our members were allowed all of the dependents claimed, and were very happy to owe no additional tax.

TaxAudit.com gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

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I want to thank your whole team for all assistance in this matter. Hopefully I will not have to worry about this matter again. I have been a user of your audit protection off and now for many years and after this event I will use it every year. By the way I have and will continue recommending your service to friends and family. Thanks again.

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Louis, Oracle, AZ

 

I would like to take this opportunity and personally thank my audit representative for her professionalism and patience in my case. She was always on top of things and is very experienced in dealing with the IRS. Needless to say that she closed the case to my complete satisfaction. All I can add is: Mission accomplished, Well done!

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The timely response was really valuable as I was just on my way to a vacation when I had to start the process. They were effective at guiding me to get them what they need to address the matter while I was on travel. They were effective at explaining to me things I had not understood earlier. They were helpful at guiding me through the steps and setting my expectations. I was pleasantly surprised by an extra tax refund when all was said and done. She definitely looked out for me.

James, Fairfax, VA

 

[1] George v. Commissioner, 139 T.C. 19, CCH Dec.59,291 (2012)
[2] Shenk v. Commissioner, 140 T.C. 10, CCH Dec.59,528 (2013)

A Little Perseverance Pays Off!

Written by: Ame Galloway, EA

I just worked a challenging case involving a discrimination lawsuit settlement that one of our members received as a former employee. The IRS examiner insisted that self-employment tax should be assessed, and it was not easy to convince her to change her mind.

During our first contact I explained that the member had not been self-employed, but had been a former employee of the company against which she had filed an Equal Employment Opportunity Commission (EEOC) discrimination claim. The employer had agreed to pay her $10K if she would drop her charges. The member accepted the terms and was issued a 1099-MISC tax form for the income. It was listed in the “nonemployee compensation” section of the form, and it was because of this that the examiner maintained that it must be subject to self-employment tax.

Unable to convince the IRS agent, I regrouped. I reviewed the Audit Technique Guide (ATG) for legal settlements and prepared for another round. I contacted her again and explained that since the taxpayer had been an employee she should not be responsible for the self-employment tax. In order to change the outcome of the audit she said the member would have to get a corrected 1099-MISC from the former employer. I explained that the member had already tried to get the form corrected, but no one from the company would return her phone calls.

I referred the examiner to page sixteen of the ATG, which states that unless a taxpayer is self-employed they should not be subjected to self-employment tax. I cited the tax court cases that were mentioned in the guide as well. Still not persuaded, the agent proposed that we petition the tax court if we didn’t agree. I told her I was hoping to settle this matter quickly without going through that process. At this point we were stuck.

As a last resort, I contacted the examiner’s manager and was able to explain how I had arrived at the conclusion that the member’s income should not be subject to self-employment tax. Again, I cited the ATG and tax court cases. She said she was willing to consider my position. She would review the case and call me back.

The next day the original examiner called me back. She agreed to correct the exam report, which reduced our member’s tax bill by over $1,200 and allowed us to avoid the lengthy petition process. A little perseverance paid off!

TaxAudit.com gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

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I was very pleased with my service. I will highly recommend you to anyone who asks and anticipate retaining your services every year.

Donald, Fort Worth, TX

 

IRS audits are inherently very stressful, even when I had all of my support documents. My representative was extremely knowledgeable, walking me through each step and providing the “professional firewall” between me and the auditor. My audit representative put me at ease and helped me feel more confident about the probable outcome.

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My audit representative was incredibly helpful and knowledgeable. He walked me through step by step on what to expect making what could have easily been one of the worst experiences in my life almost a breeze. The fact that I never even had one single conversation with the IRS, because my audit representative handled everything for me, amazes me! My audit representative not only answered every question and concern I had, but also gave me sense of comfort that he was here for me going through this ordeal with me. I know for a fact without the help of him this would have turned out much different. My friend was audited years ago and still to this day is having to deal with the IRS and is completely miserable. My experience has been the complete opposite! Please let my audit representative know he is much appreciated!

Theresa, North Charleston, SC

 

Receiving a tax audit notification was rather unnerving. My audit representative provided excellent guidance in gathering the requisite documents and invaluable assistance in resolving the issue, resulting in a “no change” decision from the IRS. One of the best investments I’ve ever made (both money and peace of mind).

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Organization Matters: Tax Audits Require Precision

Written by: Sondra Cates, EA

“You mean the case is closed with a zero balance due?” Tan asked.

“Yes,” the IRS examiner said.

Tan was pleasantly surprised. Even though he had sent in a well-organized response for our member, there had been documents missing from the package and not all of the deductions had been supported. The member had moved and lost some of the items and he had been unable to retrieve them from third parties within the time-frame allotted by the IRS.

The examiner had called Tan to let him know that she was closing the case with no changes or adjustments. She explained that the response package he had sent in had made her job easy. Even though the documents provided did not fully support the amounts claimed on the member’s return, she said she had closed the case because they were so well identified and organized that it had saved the government time and money. She praised him for doing such good job and said she wished all correspondences she received were organized in that same way.

While our audit defense service does not include bookkeeping, Tan had worked diligently with the member to provide a response package that was easy for the examiner to understand. He had guided the member in gathering the necessary documents to support his medical and dental expenses, gifts to charities, and employee expenses, providing him with formats for organizing them and creating spreadsheets. Tan had taken the extra time to ensure that there was cross referencing from the spreadsheets to the documents to make it easier for the examiner to locate each receipt.

All of their hard work paid off. The case was closed that day and the examiner told Tan he could let the member know. Of course, the member was thrilled by the result of his audit!

TaxAudit.com gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

At first I was very leary after receiving the notice from IRS, but after the process was complete, I was happy I purchased the protection plan and feel confident all is well.

Ozzie, Mesquite, TX

 

My audit representative did an excellent job in handling our audit. We will highly recommend TaxAudit in the future and are very grateful to have had this service.

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I have used this service for more than ten years and never needed it. The one time I did paid for itself ten-fold. This is the greatest value service I have ever purchased, hands down! My audit representative left me with a feeling of calm and confidence during an experience for most that has been described as been as traumatic as the loss of a loved one. I never experienced any such trauma, thanks to my audit representative’s, professional, and confident demeanor. He was a professional throughout the seven month ordeal. What could have become a major disruption to our lives was actually transformed into a learning experience, for which we are all the better. Thank you.

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If I could give this service a higher grade than very satisfied I would. I am so thankful for all the help and work that my audit representative did that I can’t thank you all enough. His service was professional, courteous and very prompt. It even ended up that the IRS owed US money. Now that’s a good outcome! Thank you all and especially my audit representative for this gold star service.

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It was very easy and stress free.

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The Tax Implications of Winning

Written by: Ame Galloway, EA

Winning is nice, but most prizes come with a price – from a tax standpoint, that is. At least this was the case for our member, an avid bass fisherman from Northern California.

The member and his buddy had won first place in a fishing tournament, and their prize was a certificate for a boat. The trouble came when the IRS sent him a letter contending that he had not included the value of the prize on his tax return.

When I spoke with the member he told me that he had, in fact, reported the prize winnings. I reviewed his return and did find the entry for “other income,” but the problem was that it just didn’t match what the IRS said it should be.

The member told me that in the bass fishing world it is not uncommon to receive a certificate like this, which has an expiration date, and post it on a forum for interested parties to buy. This is what he and his buddy did, but they were unsuccessful in their efforts to sell the certificate. With the expiration date fast approaching, his buddy offered to buy out the other half of the certificate for $9k. The member took the money and reported the actual amount he received − instead of the amount reported to him on the 1099-MISC form − as “other income.”

I thought I would get some feedback from the other audit reps so I sent out an email asking if anyone knew how the bass fishing world worked and if they had run across this before. Their responses confirmed what I had been thinking: if I could prove the FMV of the prize I could get a “no change” on this audit.

The taxpayer sent me the printout from all the tournaments he had received any winnings from along with the copy of the check his buddy had given him for his half of the new boat certificate. Since this was the amount a willing buyer was willing to pay a willing seller, it was the true fair market value.

I submitted our response to the IRS and was successful in getting the “no change” I was expecting. The member was happy with the outcome and now understands the importance of documenting the FMV of prizes won, having learned first-hand how they can be reported at an inflated value.

Even though there may be tax implications involved in some types of winning, it’s still better to win than not to win. Winning this audit case was a lot of fun, and, happily, my feeling of victory is one prize the IRS can’t tax!

TaxAudit.com gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

Amazing experience. Painless, and a fantastic result. The IRS requested 22K, with your help I got an $800 return. Thank you again!

Gregory, Fairfield, CT

 

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Frank, Spartanburg, SC

 

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Edward, Houston, TX

 

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I am really grateful for the good professional help I received. Glad that I spent the small fee to have TaxAudit in my corner and will most definitely use their service every year. I had to hire a tax rep. once and it started at $1500.00. TaxAudit was worth every penny and was a world apart on the fee. That and just knowing if something does happen they are there if I ever need them again. Thank You!!!

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I am thrilled that I made the smart move to include TaxAudit protection with my annual tax filing.

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I will definitely purchase this option with each use of TurboTax. My audit representative made the whole process simple. I could not have handled this on my own. Great work!!!

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Thanks for your assistance. I will always use and recommend the audit defense team.

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The process was smooth and ended with a positive result. I couldn’t have been happier with the value of the services I received for the small up-front cost of Audit Defense.

T S, Port Angeles, WA

 

When I contacted “Tax Audit” that I had an IRS notice for Audit, I was astonished by the response within a couple hours. My audit coordinator then contacted me by phone, explained the procedure, and within one day my personal representative was appointed and had also contacted me by phone within hours. Amazing. My audit represent then told me what he needed, and continued to keep in contact with additional records needed and put together a complete package up until the day of the audit. I was always kept apprised of any developments and resolution of the audit. Best personal service I have ever received from any service agency in any field. Thanks a zillion.

Thomas, Pickerington, OH

At the Movies

Written by: Chuck Long

We often hear stories about IRS examiners being unreasonable and difficult to deal with, but in my experience that’s not always how it goes. Here’s a story about an IRS agent who showed compassion for a taxpayer’s plight.

The case was assigned to me in late July. Our member was an octogenarian who lived alone. He’d invested almost the entire contents of his 401K − over $50,000 − into unregistered securities. The securities were movie production investments which were structured as loans with “back end” participation if the movie made money. The investment instruments were not publicly traded and were illiquid, so trying to sell them would be pretty difficult. The companies who sold these investments targeted retired persons at home watching TV during the daytime.

Our member had liquidated almost his entire 401K and rolled it over to an alternative investment IRA custodian to hold these “private placement” investments. During the period from 2004 to 2006, the taxpayer made investments in these products even though he did not meet the investment qualifications ($1,000,000 net worth and $100,000 liquid capital). In addition, he never received an interest payment or any other return on his investment. In October of 2010, he received a notification from the custodian that they were finally able to get a valuation from the issuer (as of 12/31/2009). Soon thereafter, the taxpayer was informed that the custodian was resigning and that he had to find a new one. The member ignored the letter. He determined he would never see any return and didn’t hear back from the custodian until in 2012 when they sent him a 1099-R showing the valuation as of December 31, 2009, as a taxable distribution amount.

The taxpayer, figuring the investments were worthless, did not show the distribution on his 2011 tax return. In late May of 2013, he received an AUR notice regarding the taxable distribution and a bill for $9,205. We responded to the notice by providing information about the different entities that he had invested in and articles describing them as a “scam.”

The IRS did not agree, and on October 3, 2013, the agency issued a Statutory Notice of Deficiency. Since the taxpayer’s documents were spotty, it did not seem to warrant filing an appeal, but we agreed to make another submission on his behalf. Rather than relying solely on documentation we’d submitted, we explained the situation in detail, hoping the IRS would understand. The available court cases for similar matters were not in our members’ favor, but I kept a positive attitude.

I contacted the IRS on December 27, 2013, and the agent said a stall letter had been issued earlier in the month. She would put in an action item for the examiner to call me.

The examiner called and said she was sympathetic to the taxpayer’s plight. If I could send her proof that there had been legal action against the principles of the companies, she would take that into consideration. I faxed over a copy of the Cease and Desist order from the State of Washington. After she reviewed it, she called back and said she had cleared the case and they would not make any changes to the taxpayer’s return.

We were thrilled. We were successful and we had another happy member!

TaxAudit.com gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

A very inexpensive service that is there if you ever need it. It was so nice to have a professional deal with the IRS!

Jimmy, Lexington, GA

 

Due to family health issues of the last several years, I found the services and guidance from TaxAudit.com extremely helpful in the handling of my 3 years of audits. If I had to do it again, I would definitely use Tax Audit resources again.

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Robert, Romeoville, IL

 

I greatly appreciate the efficiency in which Tax Audit handled an experience that is totally overwhelming to the average person. I am a customer for life.

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The Great Communicator

Written by: Eric Linden

If there is any endeavor in life that embodies paperwork, files, paperwork, and more files it is our wonderful yearly tax dance. The importance of a comprehensive and complete tax file cannot be understated. We all want those helpful tax deductions; however, we must do our part as well. Creating a meticulous tax file full of the necessary tax documentation to substantiate your deduction claims is paramount. Not many know this better than my colleague Wyatt Lewis.

Recently, Mr. Lewis was involved in a case in which a Member was unable to sufficiently provide the necessary and required paperwork to assist in us making the best case possible to the IRS. We may be exceptional number crunchers at TaxAudit.com, but we are also empathetic communicators. When Wyatt sensed the Member’s resistance to providing what was needed, he put on his communicator hat and went to work.

In this particular case, Wyatt needed the holy grail of tax deductions: receipts. We all know how much fun it is to save receipts and keep everything organized. We lead busy lives and taxes often get in the way. Our Member felt the evidence he had already provided would suffice and receipts would not be needed. After years of assisting clients with tax audits and letters from the IRS, Wyatt knew otherwise, and his challenge was to kindly and gently persuade our client of this.

Wyatt proceeded to educate the Member on why we needed what we needed and how this would benefit him. He explained confidently and competently the benefits the Member would receive if he took the proper steps by providing exactly what we need to represent him before the state of South Carolina. Ultimately, Wyatt was able to obtain a no change letter for the Member. Obviously, the Member was thrilled with the outcome and understood why Wyatt had been steadfast in his requests for the proper documentation. Wyatt’s expertise resulted in a happy and beneficial outcome.

TaxAudit.com 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! He did not stop until he had a fair and correct outcome to my tax situation despite a lot of push back from the IRS auditor. Thanks to him I didn’t owe any more money to the IRS. Great job.

Peter, Marietta, GA

 

Excellent customer service and expert representation. TaxAudit service is “worth its weight in gold”–I’ll never file without it!

Susan, Las Cruces, NM

 

Excellent service, worth the cost of not having to deal directly with the IRS.

Michael, Seabeck, WA

 

Getting a notice from the IRS is never fun, but my audit representative made dealing with it a lot easier.

Stephen, Longboat Key, FL

 

Great experience. Our representative was very knowledgeable and helpful. The issue was resolved with the IRS 100% in a very short amount of time. Thank You!!

Brad, San Rafael, CA

 

I advise anyone who is filing his/her tax return, especially those who are filling by themselves, to consider this service as a body guard as you never know when the big man will come after you. Even though I had all the supporting requested documentations, I could not have defended my case easily. For instance, one of my records was kept in my email so when I printed it out, I did not realize the system automatically defaulted the receipt date to the current date. Fortunately enough for me, the representative was able to detect it. If I were to defend myself to the IRS, I would have submitted this document which could have put me in trouble. I am very satisfied and every year now, when I am filing my tax return, I will consider Tax Audit.com as my audit experts. Thank you TaxAudit.com and particularly to my coordinator and representative.

Abdourahmane, Cheektowaga, NY

 

I am extremely satisfied of the work done by TaxAudit; they won my case and debunked the IRS’s claim, and I never had to deal with the IRS. TaxAudit took care of everything.

Travis, Dana Point, CA

 

I couldn’t be happier with my Tax Audit experience. I will definitely continue to use this service in the future, and will recommend it to friends and family.

Daniel, Seattle, WA

 

I love this service, and I’m so glad I signed up for it. I almost just paid the IRS notice because I did not understand the basis for their increased tax amount. My audit representative helped explain why the IRS came up with their amount and how I could show that the IRS was incorrect. Once I provided the paperwork, she took care of the rest, saving me time and stress. And, I owe the IRS nothing! Win!

Janel, Oakland, CA

 

It is superb. You take the fear out of an IRS notice!

V Bruce, Menlo Park, CA

 

My TaxAudit Representative saved me over $2500. In addition he saved me much time and stress! I never had to deal directly with IRS. My TaxAudit Rep kept me informed by phone and email of events during the process. I am extremely happy with the outcome of my tax audit.

William, Tucson, AZ

Like Magic

Written by: Diane Potter, EA

One of our core values here at TaxAudit.com is empathy. One of my colleagues, Mary Margosian, embodies this characteristic more than just about anyone I know. When one of our audit reps left the company, she took over a very difficult case. Her compassionate approach to the situation worked like magic.

The case had begun in July of 2013. The Member had numerous medical issues and many doctor appointments during which he could not answer the telephone. The original rep would leave a message and the Member would call him right back. This went on for a while and then the Member suddenly announced that he no longer wanted to use our Member Assistance Portal (MAP) or converse with us on the telephone. Instead, he wanted us to send everything to his regular email account so he could have a paper trail. The Member had many discussions with the original rep, me, and Dave DuVal, our Customer Advocacy VP, during which we all explained that emailing is not secure and using MAP is a better way to send in his information. Finally, an agreement was made that the Member would only communicate with TaxAudit.com by U.S. Mail.

When the Notice of Deficiency arrived, the Member refused to speak with us about it or download the information from MAP. Reaching him by phone was no longer an option, as we could not get through to leave him a message. But everything changed at the end of October when Mary took over the case. The Member began to return phone calls, signed the NOD engagement letter, and basically turned over a new leaf with us. His case was resolved and it is now closed without going to tax court appeals.

When I asked Mary to reveal the secret to her success, here’s what she said:

After reading all the notes on the case prior to making contact with the Member, I was able to acknowledge his issues and concerns up front. My main objectives were to convey to him that I understood his situation, reassure him that we are here for him and value his membership, and at the same time try to help him understand our situation and what we needed. Mainly, I just actively listened to the member. I was glad that this ended on such a good note.

Thank you, Mary!

TaxAudit.com gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

Best investment I ever made. TaxAudit.com made a very stressful letter from the IRS into a simple and easy matter. They were in touch with me along the way and the MAP system let me view and see what was happening. Easy and extremely efficient!

Kelly, Countryside, IL

 

Excellent service, and very knowledgeable representatives. They help me through the audit process in a very professional way, resulting in a 50% reduction of penalties, from the original amount. I am very thankful that I had subscribed to this service.

Santiago, El Paso, TX

 

Great Job, I would highly recommend TaxAudit.com.

Donna, Sunnyvale, CA

 

I have dealt with the IRS in the past and know I could have done it again directly. The benefit of using TaxAudit.com is that it took away the stress of dealing with the IRS. Dealing with the IRS is time consuming and my time is worth much more than the cost of TaxAudit.com.

William, Williamsburg, VA

 

I have paid for TaxAudit.Com each year for the past 12 years when completing my TurboTax returns. I always worried whether the money I paid would prove money well spent in the event I ever had to go thru an audit. This year I received an audit from NJ State. My immediate reaction was to reach out to TaxAudit.com to assist with the review and potential defense of the audit. It was gratifying to learn that my engagement with my audit representative and the TaxAudit.com was one of the most professional and courteous engagements I have ever experienced. I have worked with audit company’s for the past 30 years in my professional career. My experience with my audit representative was as good or better than the services I experience with the Big 4 Accounting Firms in our country. His knowledge base and professional nature was something I would have expected from one of the $350,000 a year accounting firms we employ to conduct financial audits. My audit representative’s professional service is a credit to your company. I would highly recommend your company’s services and have the utmost respect for the value and protection you afford your clients.

Kurt, Belle Mead, NJ

 

I have used Tax Audit for several audits. In every case I have been very satisfied. My representative has been quite knowledgeable about my case. She has been good about keeping me informed as to the progress of the case. As a result I have never been worried nor discouraged about my case. Whenever I prepare my income tax I always make certain to sign up with Tax Audit. I recommend Tax Audit to anyone before they file their income tax.

Clark, Sewanee, TN

 

I must admit, I was unsure what to expect when I was notified of an audit of my 2011 taxes. I’ve signed up for TaxAudit.com for several years with some hesitation on the type of support I would get if audited. From the beginning, my audit representative was an absolute pleasure to work with. He explained everything he needed, provided me with copious updates and always seemed to be one step ahead. My involvement with him alone completely erased any hesitation I’d ever have about using TaxAudit.com. I appreciate his guidance and support. My audit extended to the better part of a year and my audit representative stayed in contact through it all. Best part of all, the $9K+ the IRS initially stated I owed was reduced to $0. It doesn’t get any better than that!

Kristopher, Edmond, OK

 

I want to thank TaxAudit.com for all their help through this process. Any time you get a letter from the IRS in the mail your stress level goes off the charts. I know the end result would not have been nearly as favorable and far more stressful without them.

Kevin, Montgomery, TX

 

It was one of the best experiences and true value for the money. I signed up for 2 additional years right away and will subscribe to this service every tax year.

Diederik, Redlands, CA

 

Thank you very much! This is the best money I ever could have spent. I’ve told everyone I know about my TurboTax Audit Defense!

Loren, Frisco, TX

 

Your staff is efficient, courteous, thorough, very knowledgeable and reassuring. I’ll tell all my friends to sign up for the audit protection; best money I have spent in a long time! Your service is excellent and I highly recommend the audit protection. I will buy it again this coming year. Thanks so very much for helping me resolve my issue with the IRS and making the entire process easy to complete.

Loretta, Hammond, IN

Never Say Never, and Never Give Up!

Written by: Diane Potter, EA

My story began in May of 2011 when the Canada Revenue Agency (CRA) was inquiring about the education expenses of my member. He lives in Canada and was taking online classes at University of Phoenix to earn his MBA. We had all necessary documents with the exception of Form TL11A, Tuition, Education, and Textbook amount certificate, which must be completed by the university. After going around and around with the University of Phoenix, their attorneys would not give them permission to fill out this form, which is a requirement by CRA to get this credit.

The CRA has special rules when you are taking online classes that make it somewhat difficult to qualify. The student must participate in regularly scheduled interactive virtual classroom type sessions. Proving this can be difficult, however, the record keeping system that the University of Phoenix has in place was perfect and provided just what we needed. If you did not attend when you were supposed to, you were dropped from the class.

We provided the taxpayer’s transcript of classes, enrollment verification, a copy of the University of Phoenix expectations and regulations for students, tuition, fees, and proof of payment. The only thing we were missing was the completed Form TL11A.

After being denied several times, we filed an objection with the CRA, similar to an appeals conference in the United States. We had found someone who understood the circumstances and allowed the credit. Success! The taxpayer received his refund.

But the story does not end there. Since we were able to get the credit for 2010, the taxpayer wanted to pursue getting the same credit for 2009, as he had previously been denied the credit and had not pursued it at that time. Come to find out, the deadline had passed to contest this. But he had a membership for Audit Defense, so we went to bat for him again.

We filed an objection based on the fact that the taxpayer was not aware that he could have objected earlier. Again, we had all of the required documentation with the exception of the Form TL11A. After denial because we missed the statute of limitations, we weren’t sure if we should continue or give in. We decided that the taxpayer would appeal to the Tax Court on his own. His day in court came, and although the case was thrown out of court, the taxpayer was in touch with an officer of the court, who promised the taxpayer if he submitted his documents again, he would make sure that they would be viewed by the right department for reconsideration.

We submitted the documents again through the officer of the court, and he forwarded them to the correct reassessment department. We received a couple more denial letters. Then, on August 7, 2013, we received what appeared to be another denial letter. At this point I had little hope that we would get this through the system. The letter stated that his information had been sent for taxpayer relief to the appropriate department. I hadn’t seen that statement before so I just assumed it was over and that we should give up.

Yesterday I received an email that the credit was approved and the member had received his refund. The moral to the story is, never say never, and never give up!

TaxAudit.com 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 turned what would have been a frustrating and nerve wracking situation around and gave me all the advice, support and assistance I needed. She was courteous and patient at every turn and had additional advice for the future that was most welcome. I honestly expected your team to behave like many large support organizations do; bounce people from one desk to the next do the bare minimum to fulfill their obligation. She proved me wrong. If she is indicative of your usual level of support then you succeeded admirably and I shall recommend your organization to everyone I know.

Benjamin, Ojai, CA

 

Tax Audit is the best!! I feel confident and secure with their services. They go above and beyond in providing a resolution to the stressful world of taxation.

Mauricio, New York, NY

 

I’ll use you again!

Kevin, Oak Hill, VA

 

My audit representative was amazing. She was always courteous, patient, understanding and completely knowledgeable. She not only had a thorough understanding of the audit process and how to navigate it, she was also able to explain and walk me through it. An audit by the IRS is intimidating, but she took my hand and led me along the entire way. It was comforting knowing she was on my side and she was truly compassionate throughout the complex process. Thank you for allowing me to have access to such a consummate professional who sincerely cares.

James, Ashburnham, MA

 

Receiving a notice from the IRS can be unsettling, but I knew exactly where to turn since I had pre-paid for the TaxAudit.com services when e-filing through TurboTax. Contacting the TaxAudit.com team was simple. They located and updated my customer information with minimal fuss or effort. Ongoing communication was both efficient and convenient with the online portal. The customer service experience was excellent! Every member of the team was extremely responsive, patient and helpful. This took away any anxiety and created trust that the TaxAudit folks would truly advocate with my best interests in mind.

Warrick, Baltimore, MD

 

They did a great job – patient with me and tough on the IRS.

Brett, Prescott, AZ

 

They took away the fear of a tax audit.

Joyce, Parkville, MO

 

I would recommend TaxAudit.com to anyone filing a return with complex issues such as small business, 1099′s, stocks, which may trigger audits. etc… After being audited twice by the IRS (with and without TaxAudit.com) the difference is like night and day.

Douglas, Amarillo, TX

 

Well worth the fee to have such a professional and expert service for this kind of situation. You never think it will happen to you, but it can. TaxAudit.com was able to assess my tax situation and respond to the IRS on my behalf – and save me $14,000!

Carol, Arlington, VA

 

When I received my audit notice, it was unclear as to the reason for the audit. After sending the documentation and spending only a short amount of time discussing the notice with my representative we were able to identify the problem and put together a course of action. With a plan in place and the professional and reassuring manner of my representative what could have been a stressful and trying process was relatively simple and hassle free. The results were better than expected and no adjustments were made to my return. Your service was invaluable to me and more than worth the price!

Curtis, Red Bluff, CA

 

Your team turned a stressful situation into a controlled environment for me. The final resolution came when the IRS said that they were disposing of our case with no taxes or interest due. Our representative and his team determined the appropriate way to respond to the IRS and we WON! I’m telling all my friends who use TurboTax to be sure to sign up for your audit protection plan when they file. Thanks TaxAudit.com for being there for me.

Robert, Stanley, KS

Documents from Afar – A Total Team Effort

Written by: Karen Thomas-Brandt and Viktoria Artishuk on behalf of Team Owl*

As Audit Rep Assistants, we are asked to perform many tasks, such as recreating tax returns, completing bank analyses and preparing response packages for the IRS. The time spent on these tasks ranges anywhere from 5 minutes to 5 days, depending on the complexity of the audit.

This case started in January 2013 and involved the 2010 and 2011 tax years. The Audit Rep Assistants were asked to prepare the response package for the member, who was living in Costa Rica. The IRS was examining his income and all of the expenses claimed on his business Schedule C.

We received over 800 documents that the Member had uploaded to our Member Assistance Portal, MAP. This was a total team effort, with all ARAs contributing to the downloading, printing, labeling, indexing, and preparation of those documents. As some of the documents were in Spanish, Perla Melara lent her expertise by translating them to English. After many hours of hard work, the documents were ready to be sent to the IRS.

The IRS responded three months later with an exam report. The results were no additional tax due. What a joy to see the exceptional results of all of our hard work!

*The Members of Team Owl are: Viktoria Artishuk, Perla Melara, Wanda Bourgeois and Karen Thomas-Brandt

TaxAudit.com gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

I think it was worth the money, easy to use, and should be recommended to all who use Turbo Tax.

Robert, Apple Valley, CA

 

I wasn’t sure what to expect but I did make errors on my return and the representative took the time to clearly explain where I made my errors. Overall I am pleased I purchased the protection and will do so from now on.

Katherine, Westminster, MD

 

It is nice to know you have professional tax representation at a reasonable price in the unfortunate event that you are audited by the IRS. My personal experience with Tax Audit was excellent.

Burgess, Atlanta, GA

 

The experience made me realize just how valuable it is to have someone represent you.

Elaine, Albuquerque, NM

 

This has been the second time I have used TaxAudit. Both times have been stress free experiences. Knowing that I have TaxAudit to assist with IRS issues gives me peace of mind and a comfort level to continue completing my own taxes. Because of you, I know that if there are issues I have access to knowledgeable, professionals to assist me. I will not file taxes without signing up for your services. Thanks!

Tracy, Spring Creek, NV

 

This is my second audit where you represented me. Both had very favorable outcomes. In both instances, your representatives were professional and easy to deal with. The annual cost of your service is a real bargain. Even if I’m never audited again, the peace of mind is easily worth the annual cost of enrollment.

John, Lake Charles, LA

 

My audit representative was very professional! She was very nice individual, very kind, patient and helped us from day one till the end! Her professional service not only saved lots of money for us but the most important put fear of owning some money to IRS behind us! We can work, live normally and sleep well at night … We just can’t say thanks enough to her and the TaxAudit.com team! Many thanks!

Shuguang, Rancho Santa Margarita, CA

 

We were very pleased with your service. Yes, we did win our case… but that was just the icing on the cake. Our audit representative took an interest in our problem and went to work on finding a solution. She gave tasks to find needed additional paperwork, showed a path to submit it and kept us informed of the progress. We felt confident that we were in good hands.

Glen, Round Rock, TX

 

Well worth the fee to have such a professional and expert service for this kind of situation. You never think it will happen to you, but it can. TaxAudit.com was able to assess my tax situation and respond to the IRS on my behalf – and save me $14,000!

Carol, Arlington, VA

 

When I received my audit notice, it was unclear as to the reason for the audit. After sending the documentation and spending only a short amount of time discussing the notice with my representative we were able to identify the problem and put together a course of action. With a plan in place and the professional and reassuring manner of my representative what could have been a stressful and trying process was relatively simple and hassle free. The results were better than expected and no adjustments were made to my return. Your service was invaluable to me and more than worth the price!

Curtis, Red Bluff, CA

 

Your team turned a stressful situation into a controlled environment for me. The final resolution came when the IRS said that they were disposing of our case with no taxes or interest due. Our representative and his team determined the appropriate way to respond to the IRS and we WON! I’m telling all my friends who use TurboTax to be sure to sign up for your audit protection plan when they file. Thanks TaxAudit.com for being there for me.

Robert, Stanley, KS

More than Just a Refund

Written by: Dale Howell, EA

Like clockwork, every year we are inundated with audits for Head of Household filing status, dependents and Earned Income Credit. Quite often, after just one phone call to the Member, we find out that the dependent claimed really wasn’t the taxpayer’s qualifying dependent at all because one or more of the complicated IRS requirements were not met.

Sometimes, even when a taxpayer is eligible to claim a dependent they just aren’t able to come up with the documentation needed to prove it.

I received one of these cases for tax year 2012 on April 4, 2013. It turned out the Member actually did qualify for her large earned income credit and was very quick to send her documentation to me. The problem was that she had only one W-2 for only $4,609 in wages, but her Earned Income Credit had been calculated based on the $16,469 in wages she’d reported on her return. This larger amount had made her eligible for the maximum Earned Income Credit for three children.

Once I received the Member’s documents I realized that the additional amount for “wages” reported on her return was really self-employment income that should have been reported on a business Schedule C. The taxpayer really had her hopes up for getting her $9,645 refund so that she could pay her rent. Without it she and her three children were facing eviction.

As sometimes happens with the IRS, the first response I faxed on 4/16/13 to the Austin SC was not received, so on 5/7/13 I faxed it a second time. Meanwhile, the taxpayer had received a letter showing she was due a refund of only $273, which was calculated from the W-2 wages she had been able to support. It took a few more weeks before the IRS could confirm the receipt of my response, and now we just had to wait.

The IRS has been extremely slow this year in reviewing responses. In a normal situation we just have to wait it out, but in this case the Member was faced with being forced to move out of her home. With no money and place to go, she called me several times in tears.

I decided to call the Taxpayer Advocate Service to see what they could do. They located our response and had it reviewed and requested an amended return be filed to include Schedules C and SE.

The taxpayer had an amended return prepared and we submitted it to the Taxpayer Advocate. The IRS agreed and has finally released the Member’s recalculated refund of $6,110, which included interest.

The best part of the story is that the Member and her three children were able to avoid eviction. Sometimes our jobs can make us feel like a Good Samaritan.

TaxAudit.com gets dozens of comments from customers we have helped every week. Below are just some of the reviews we received last month.

Thank you so much for your quick and professional help!

Daniel, Pinson, AL

 

TaxAudit.com was very helpful in solving my IRS issue. The staff were very courteous, knowledgeable, and professional. This one service basically paid off the annual fee for a lifetime of tax forms. I strongly recommend the service if you have anything more complicated than the 1040EZ.

Elizabeth, Muskegon, MI

 

Every year from now on, when I use Turbo Tax to do my taxes, I will FOR SURE check off that little $39. box! This was the very best $39 I have spent in a long, long time.

Gregg, Epping, NH

 

I was very frustrated and confused when notified of the audit. I was very thankful that I had purchased Audit Defense protection when filing my taxes. The Taxaudit.com staff relieved my anxiety and the help in resolving this matter was beyond my expectations. I am so thankful to the staff at TaxAudit.com.

Tonia, Waterloo, AL

 

In my opinion an IRS audit is never pleasant, but TaxAudit.com kept me updated and provided step by step instructions which made the process much less stressful. On my own I know I would have missed some critical steps.

Adam, Silver Spring, Md

 

As long as TaxAudit.com is in existence I will utilize their services.

Virtis, Philadelphia, PA

 

My representative shielded me from all the most painful and stressful parts of the process. He did all the interfacing with the IRS, talked me down from my panic numerous times and gave me great advice. In the end, I was delighted to find that I only had to pay a fraction of what I originally thought. Now that it’s all over, I feel so blessed to have had you guys on my side! Being covered by TaxAudit.com is a total no-brainer.

Lisa, La Mesa, CA

 

So glad we signed up. Saved us a lot of money. If we had to do this on our own I don’t think the results would have been the same and it would have been a major headache. Thanks.

Charles, Norwalk, CT

 

I highly recommend TaxAudit.com to all taxpayers. I received prompt, knowledgeable, personable and efficient service, helping me step by step all the way giving me peace of mind.

Raafat, Nottingham, MD

 

I’m happy I became a TaxAudit.com member in time. My IRS audit was resolved smoothly and professionally.

Zivan, Rego Park, NY