THE IRS HAS BEEN BUSY……..HAVE YOU?

  The IRS have hired an additional 15, 000 agents for the upcoming tax season. In the state of Virginia alone  in 2 years 7,000 agents were hired. The government needs money and they have elicited the help of the IRS to help collect. They are serious and focused on targeting small businesses. Some items the IRS are requesting when they audit small businesses are:

•          Invoice and receipts
•          Logs to track miles
•          Income and expense ledger
•          Proof travel was taken for business.
•          Daily business calendar or Tax Diary
•          Proof of home office deductions
•          Many others

It is very important that the information above answers the following questions:

•          Who
•          What
•          When
•          Where
•          Why/How

I have always believed that too much information is better than not enough information.

When a small business is audited by the IRS, the questions that need answers are: 

•          Who were you with / whom did you visit (if any one)?
•         What was the purchase or the event for?
•          Where did this event or purchase take place?
•          When did the purchase or event take place?
•          Why or how does it pertain to the business?

I think it is better to have the answer to a question not asked then not have an answer to an asked question. 

To put it simple, if a business owner keeps thorough records in anticipation of an annual IRS audit then the business will not have anything to worry about.

Having thorough and organized records makes it more affordable for the tax lawyers, tax professionals or accountants to counsel a business during an IRS audit.

Why are the Middle Class Bullied by the IRS?

 My honest but humble opinion of the basic ideology of the thee classes that exist (poor, middle class and wealthy) gives insight to that very question. The mind sets of the 3 classes are:

• The poor are trying to survive. 
• The middle class are maintaining. 
• The wealthy are looking to surpass. 

An old cliche' that has been repeated often (especially by me) is if you are not moving forward you are automatically moving backwards. The government and the IRS in particular understand this cliche' and keep track of  who are maintaining and and moving forward by conducting audits on every tax return every year. Most people are not aware of that fact. 

  The economy, politics and budget cuts have given the government another reason to search for more revenue. Unfortunately the middle class are the the target of such "financial bullying". I think one of the biggest reasons for such an assault is the middle class are an easy target. 

Like previously stated the middle class are considered "maintainers". Once the nature of a person or a group to maintain  is understood then it is easy to see why the middle class are the target of choice. On a whole they will do what ever it takes not to loose what they have.

 The fear of loss will encourage compliance with what ever is presented even if it the presented information is wrong. 

Example: The IRS sends a letter stating that there's an error on the tax return. The letter basically states that IRS records don't match the tax payers tax return so the refund is smaller than what was reported on the tax return. The "maintainer mentality" is.... , "ok I dodged a bullet so I will let them have what they want, I still get a refund check ".  There may appear to be nothing wrong with the above response. Lets look at it from a different perspective. How would the middle class respond to:

• The cashier gives $5.00 dollars change but should have given $10.00 dollars in change
• The ATM disperses $80.00 dollars instead of $100.00 and debits the account $100 dollars.
• The bank financing the car loan auto withdraws $350.00 from the account instead of  $300.00.

I think it is safe for me to assume that most people would not let any of those things happen without doing something to correct the issue. So why do middle class allow the IRS to bully them?

• Little to no knowledge of tax payers rights
• Public misinformation /perpetuated by the media,family members and friends.
• Fear of the IRS.

If  the the middle class does nothing to stop the bulling it will only get worse. I am just saying....