Irs Audit

Discussion in 'Business Operations' started by puppypaws, Jan 3, 2007.

  1. puppypaws

    puppypaws LawnSite Fanatic
    Posts: 8,945

    How many of your lawn care businesses have ever been audited by the IRS and how did you come out? The IRS is a little short on money or they would audit every business they could to generate more income for your federal government to waste. When they come after you they automatically expect to take some of your money or they would not waste their time.
     
  2. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    I send them money first in the auto audits, then ***** hard. I get some back. I use a CPA to keep my books but I handle ALL the payments.
     
  3. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    The IRS has different levels and types of audits. Sometimes they'll audit you and you never even know it. That means they pull all of the available info they have on you and go over it. If they see something they don't like they'll then ask you to explain it. If you don't provide a good answer they'll start looking at other years. They sometimes just pull your name out of the hat and audit you. Then there's the Red Flag audit. Certain businesses can be expected to have certain deductions and amounts on a percentage basis. If your return falls outside of those criteria then the computer will automatically put a red flag on your return and a agent takes a closer look at it.

    I think I read a few years ago that they were trying to step up on audits but money was holding them back. The ratio was around 1 in 300 returns were audited.
     
  4. Nathan 281

    Nathan 281 LawnSite Member
    from MN
    Posts: 80

    I was audited when I was 17 years old. So they will come after anyone who they feel may be trying to hide something.
    When I was 16 I was living at home and reinvesting every dollar into the business bought a new truck, mowers and everything else. On that years tax return I showed an income so small I did not have to pay any taxes. The thing that sent them on to me was the fact that I had a brand new truck (100% tax write off) and no income. My parents were taking care of all my other expenses at that time.
    So at 17 years old I get a call from some irs worker saying that I need to gather all my paper work and they are going to come by and meet with me about my business and look over all my business assets. The auditor came out looked over everything and asked a 100 general questions. And then a bunch of what ever she could come up with. They try and understand how your business works, they look for any holes in your story and they are good at looking for any way that you may be cheating the system. After our first meeting was over with it looked like she was going to give up because she thought everything looked ok but she had to talk it over with her manager. Then get back to me on what they decide.
    At our second meeting her manager decided that they were going to go after my truck. Because I did not keep a mileage log at that time, she had put together some kind of formula together that would be a fair representation of what I had used for business use. In the end it cost me $3,000 out of my pocket that day. And I still feel that I was robbed at home that day.
    It has helped my business a lot I now keep vary good records and have a good understanding of all of my financial stuff.

    This was the worst thing my business has gone through and all of you young kids out there you need to keep track of where all your money is coming form and where it goes. And you need proof it is not only the most important part of running your business it is the law
     
  5. puppypaws

    puppypaws LawnSite Fanatic
    Posts: 8,945

    This is kinda interesting to me what other people have been through with the IRS. They did a full blown lets see what we can get from this person audit on me, when they finished there was nothing about me they had not investigated. I'll swear they would call me at 6:00 in the morning and ask me questions about documentation I had provided them. When it was all said and done they ended up paying me money with back interest so that tells you what kind of records I keep. You can flat believe they did not like that at all, the amount of time they spent on my investigation caused them to waste that amount of money plus having to pay me did not look very good to their bottom line, or to their superiors. I just wonder what the percentage would be of people they collect more money from, I expect it would be high.
     
  6. MStine315

    MStine315 LawnSite Senior Member
    Posts: 789

     
  7. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Posts: 7,547

     
  8. KCLandscape

    KCLandscape LawnSite Senior Member
    Posts: 526

    No, luckily I have never had the chance to go down that road...
    And, luckily, I have never had to go and risk my life for a dispute that is not worth the money, or lives.

    I wish that it was as easy enough for all of us here in the United States to make a decent living in OUR U.S.

    I am waiting for our current establishment to call it as it it...
    A DUCK IS A DUCK....
    What are we (you and myself and our famalies, and our previous inhabiants, and my kids, and there kids, and my great-grand kids waiting for???


    OK>......I am sorry, I forgot about the OIL
     
  9. KCLandscape

    KCLandscape LawnSite Senior Member
    Posts: 526

    And I still feel that I was robbed at home that day.


    Good job Puppy...
     
  10. tacoma200

    tacoma200 LawnSite Fanatic
    Posts: 5,426

    I don't like the tax man either, but we live in a very tax friendly country. Yes they waste it but compared to other country's we have it pretty good. And the IRS isn't as bad as it used to be. Bad but not as bad. How did we go from IRS to oil?
     

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