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The Audit Lottery – It’s In the Book

When I was an IRS office auditor, a taxpayer who was a long-distance truck driver and, fortunately, not my victim­, was audited on his travel expenses. When he appeared for the audit, he had the most beautiful records! In fact, his records were so beautiful that the auditor commented on them. When complimented on their neatness, the truck driver smilingly responded, “Of course, these records are beautiful! They should be, because my employer keeps an impeccable file of receipts for all of us to use when we get audited.” Second helpful hint regarding audits: Never volunteer any information to an IRS auditor!

Then there was the airline pilot. He was also audited on his away-from-home expenses. He appeared for his audit with a diary that could be purchased from any office supply or stationery store. He said he used it to keep track of his daily expenses, including costs for meals, lodging, and incidental expenses. Note: The IRS is usually about two years behind in its audits, so the pilot brought in a diary that he said he’d kept on a daily basis for the year in question, two years prior. His fatal error? The copyright notation printed on the first page of his expense book was for the current year! The pilot had purchased the book the week before his audit and, using different kinds of ink, had tried to make it look like one that had been kept properly on a daily basis.

*** By the way, the two IRS clients just described not only had to pay additional taxes but were prosecuted for fraud. Needless to say, their techniques are not recommended or endorsed by this author!

Above is an excerpt from America’s Wackiest Tax Deductions! by Noelle Allen, CPA. It can be ordered here: Amazon America’s Wackiest Tax Deductions!