The Heat Is On

By Jerry Stewart

Over the last two weeks I’ve been talking with you about this very hot topic of the IRS and just how hot and bothered most every American gets when they think of the possibility of a tax audit. Now, let me say this again – most people working for the IRS are really nice people, just doing their job. Oh sure, there are a few jerks working there, but that’s true for any business.

But what bothers us all is the tremendous power and authority the IRS has and their ability to slap on tax liens, levy bank accounts, and actually take property. But the truth is this – most all cases with the IRS end with none of these things happening, AND if you follow the very simple steps I’ve been giving you, you have absolutely nothing to fear from the IRS. In fact, you’ll be downright audit proof. Now, before I give you my step 4, allow me to review steps 1 – 3.

First, be honest. I believe that most Americans are basically honest people. But sometimes even honest people fudge a little on their taxes by slightly exaggerating their expenses or conveniently forgetting some income. But, don’t be tempted, stay on the straight and narrow, be honest.

Second, avoid extremes unless you have solid written proof. The IRS doesn’t want you to fail to take a tax-deductible expense, but when you take that expense they have the right to make you prove it. So, don’t be afraid to take any legal deduction, no matter how extreme that amount is, but you must have solid written proof.

Third, accuracy. If you’re going to beat the IRS audit game, you must have accurate, provable records. But here’s the main fact. There is a direct correlation between the quality of your bookkeeping and the amount of tax you pay. Simply said, the better your records, the more provable deductions you have, and the less tax you will pay.

Now, fourth, the last of our steps – be thorough. Now, that may seem to be the same thing as accuracy, but it’s not. Accuracy is more about the quality of your work. Thoroughness is about quantity. I can’t tell you how many of my tax clients come in to see me with only part of their records. They have tax deductible expenses paid by cash but they didn’t keep their receipts. They have business or medical or charitable mileage driven with no written record. All kinds of expenses that could be used to lower their taxes, but they kept no record.

Now, let me end with this statement of fact. I have had literally hundreds of IRS tax audits in my professional career and I can say without exception the following – those taxpayers who were honest, avoided extremes without proof, whose books and records were not only accurate but thorough – not one of these tax clients ever paid a dime extra after an audit. They are literally audit proof, and you can be too

Well, that’s all for now. I’m Jerry Stewart saying goodbye for now and don’t forget – IT’S YOUR MONEY!