I fought the law and . . .

I won!!! The IRS Audited our 2004 tax return. After 11 months, about 30 pounds of paper in copies, and some good times spent in a CPAs office, we won!!! And I just have to share the good news. I want to update this story, later though . . . it's a long one!

UPDATE Ok, at the request of my good friends I've finally gotten around to telling the story. It starts out with the letter in June 2006 that our 2004 return was being audited. This was not a big surprise -- that year we had about 60% of our AGI written off on itemized deductions (about 20% was medical from paying for in vitro, about 15% in mortgage interest with 2 homes in las vegas with sizable mortgages, another good chunk was charitable donations with tithing and donating two cars, etc.). So I kind of expected it and I tried to keep really good records. The thing is the audit notification was so confusing -- it had said that it was disallowing $4000 in work-related expenses that we claimed . . . but we never claimed that!! But on other things like medical costs it had the right numbers and was saying that it was disallowing half of the medical, etc., stupid stuff like that. So looking at the original audit it was very clear this particular agent liked to smoke illegal substances -- especially at work. Anyway it says we owe about $900 in back taxes.

So I'm 100% confident in making copies of everything I had and having this taken care of by myself. I have, after all, a BA in Accounting. So all of my tithing statements from tithing settlement, alot of medical receipts, etc.--are all copied, organized, and sent off to Atlanta. It took them nine months to review my file and finally get back to me. Their response was basically like this, "We are sorry we basically screwed up the last audit. But based on your real tax return we are disallowing all of your charitable and medical deductions because you didn't prove that you paid for them yourself." Now they say we owe $4500 in back taxes -- including penalties and fees.

It freaking blew my mind. I had sent in the official tithing reports that say on it that you are supposed to file these with your taxes. And my medical receipts were complete except I was missing about $30 in prescription records (you have to submit reports of every prescription) and there were times I paid medical invoices by writing my credit card # on it and sending it in. For those I HAD NO OFFICIAL RECEIPT because they don't send one back to you. So I am totally at a loss because I have given them every single thing I had.

So off I go to the local CPA's office. I had no choice. I was ticked off, too. For some reason the IRS decided they were going to nail my butt to the wall anyway they could. So the CPA gets power of attorney for us and gets a taxpayer advocate on our behalf. He tries to tell everybody we already sent in all applicable documents, but they just told him the burden of proof is still on our side so he decides let's just go ahead and copy every checking and credit card statement that has a charge and send it in --- along with copies of my canary yellow tithing statements, which I think was unnecessary because I already sent in the official docs! Anyway, three months after this was all sent in we did get a notice that our case is closed.

Dang straight, case is closed. Just so ya know IRS? Don't mess with me.