My IRS Audit Story

Tax day is tomorrow.  After 10 years in business, I finally had my first IRS audit recently.  Technically it's not over yet so perhaps this is the dumbest post I've ever written (I know a few readers who would disagree with that).

The actual audit itself was painless.  The auditer is very nice, seemed more interested in how I started my business than really grilling me about other stuff.  She did ask some questions and once she understood how my business works, she seemed to be satisfied that whatever initially raised red flags isn't an issue - at least that's how I interpreted it; here's hoping.

And while I was impressed with the auditor's ability to research me (e.g. she knew about a bunch of websites I run or used to run), I was shocked at how inefficient our government truly is.  Here are two big examples:

1. Even though my auditor works for the IRS, she can't access all of the documents I have filed which requires me to reproduce them.  I ended up supplying approximately 500 pages of various returns and forms.  I'm shocked that the IRS doesn't scan these forms or do something that would make it easier for agents to access documents that they need.  In fact, we are scheduled for a follow up because she can't access my return from this year that was filed in late February or a handful of documents from 2009.  Surely I'm not the only on that this happens to and clearly, even if I had done something wrong, it's a waste of her time to have to come back to my office and gather these documents.  Which leads me to point number two.

2. I actually have everything the agent needs in electronic form and offered to e-mail it to her.  She said I could, but discouraged me from doing so because the IRS doesn't have a secure network.  Huh?  How can the IRS, with all of the financial information they control, not have a secure network?  I could fax in all the documents if I want, but to paraphrase the great comedian, Jeremy Hotz, what a miserable idea that would be.

One of my great pet peeves are organizations that don't change because "this is how we've always done it."  Not that I had great expectations for the IRS, but this actually shocked me.  I get disgusted by how many people are able to cheat taxes, but I'm honestly sickened at how much is wasted because of inefficiency that is really not complicated to fix.

President Obama has spoken of over-hauling the tax code as did President Bush & Clinton.  I'm not optimistic that anything will happen, but even if they don't, I wonder how many years it will be until we leave the 20th century behind and properly use basic technology.  I loved the 80's as much as anyone else, but this is ridiculous.

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  • Just for the sake of all those people like me who have not filed (state) yet - Tax Day actually is Monday, April 18, not tomorrow. Yes, it's usually April 15, but not this year due to a federal holiday tomorrow.

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