We recently concluded an eight-month-long audit. The members I represented were a tandem husband and wife long-haul truck driving team. There was a large amount of unreimbursed employee business expenses on their tax return, which caught the attention of the IRS. The members did not elect to receive “per diem” from their employer, meaning that some of the expenses could have potentially been repaid. Our Quality Control team pointed out that this fact raised a potential challenge for us, as the IRS can disallow expenses that could have been reimbursed but were not due to the election of the taxpayer(s).
With help from our members, a revised employer letter was issued indicating that by choosing not to elect per diem, their taxable wages significantly increased. They also provided roughly 200 pages of substantiating records, including bills of lading and receipts from Walmart and other retail stores throughout the continental U.S., showing they were on-the-road for nearly the entire year.
Citing a pertinent Revenue Ruling and Treasury Regulation addressing the need for taxpayers to claim the associated expenses as an itemized deduction, we sent a response to the IRS in late October. We advised our members that it could take a couple of months before we would hear back. When the government shutdown in December, we knew that the wait would be extended ─ and we promptly relayed this expectation to our members.
Finally, on March 11th, we received a letter of no change from the IRS. The wait, though unpleasant, was worth it! The vitality and cooperation of our members played a significant role in the outcome of the audit. Over the eight-month life span of the case, we remained in near constant contact, as evidenced by our 38 separate communication exchanges since the audit first began. When we initiated contact or made a request, it was immediately returned with the necessary information. This just goes to show the extent of effort and commitment we at TaxAudit give to each of our members. We’re there with them every step of the way.
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