4 ms·

It's really tempting to say that the IRS won't be able to do anything - you can't prove I spent/received this for <x> type of activity.... but that's not how th

It's really tempting to say that the IRS won't be able to do anything - you can't prove I spent/received this for <x> type of activity.... but that's not how the IRS works. Once the IRS decides to audit, you are guilty until proven innocent. They will be elbow-deep into your figurative financial rectum, and you will (almost always) lose.

wbl 10y ago
That's because they are very good at picking who to audit. If you can document all your deductions, and have all your sources of income declared, and stored it all together an audit consists of hitting print, handing the scanned copies to them, and waiting.
- cloakandswagger 10y ago
  US tax law is so dense and complicated that they can effectively implicate anyone they choose. Having worked with numerous small businesses in the past, do you know how many of them could readily provide carbon copy receipts for every single deduction they claimed in the last X years? I think there is a valuable discussion to be had about the power of a federal agency that can so easily zero their sights on anyone they choose, especially when that same agency has admitted to targeting for political purposes in the past.
  - Amezarak 10y ago
    > do you know how many of them could readily provide carbon copy receipts for every single deduction they claimed in the last X years? So on what basis did they take those deductions in the first place, if they didn't have the documentation to figure out what their deduction was in the first place? Did they just guess? Or are you saying they had it for one tax season and then destroyed it?
    - cloakandswagger 10y ago
      Either they had it and destroyed it, lost it or did what lots of small businesses do and had a credit card or checking account only used for business, then referred against the statements to determine deductions (sans receipts)
      - ncallaway 10y ago
        Is an e-mail copy receipt sufficient for the IRS? As a small business, we travel a lot and obviously book travel online (as well as make a number of other business purchases online). I've never even considered that the e-mail receipt or purchase history on Amazon.com might not be sufficient documentation. Is this something I should spend the next half-hour researching, or am I concerned over nothing?
        johncolanduoni 10y ago
        IANAL, but looks like it's addressed on page 9 here: https://www.irs.gov/pub/irs-irbs/irb97-13.pdf https://www.irs.gov/pub/irs-irbs/irb97-13.pdf I'd be shocked if it wasn't, since invoicing purely by e-mail is pretty common these days.
      - gamblor956 10y ago
        Receipts can be trivially documented by taking pictures with a cell phone at the time of purchase.... In my experience bank/cc statements have been sufficient documentation for smaller or recurring expenses.
  - wbl 10y ago
    Anyone with W-4 and investments in a major mutual fund company probably doesn't have a problem complying with the tax law.
  - gamblor956 10y ago
    If you choose to take a deduction, it's on you to keep the relevant documentation for that deduction for the period proscribed by law, generally 3 years. It's been a well-established principle of tax law for several decades, and there's really no excuse now that records can be easily and trivially digitized.
- csomar 10y ago
  Not in the US. Been 7 years into business. It's practically impossible to be 100% clean on deductions, receipts, reporting, etc... That, and I'm very strict by any standards.

wbl 10y ago

That's because they are very good at picking who to audit. If you can document all your deductions, and have all your sources of income declared, and stored it all together an audit consists of hitting print, handing the scanned copies to them, and waiting.

cloakandswagger 10y ago
US tax law is so dense and complicated that they can effectively implicate anyone they choose. Having worked with numerous small businesses in the past, do you know how many of them could readily provide carbon copy receipts for every single deduction they claimed in the last X years? I think there is a valuable discussion to be had about the power of a federal agency that can so easily zero their sights on anyone they choose, especially when that same agency has admitted to targeting for political purposes in the past.
- Amezarak 10y ago
  > do you know how many of them could readily provide carbon copy receipts for every single deduction they claimed in the last X years? So on what basis did they take those deductions in the first place, if they didn't have the documentation to figure out what their deduction was in the first place? Did they just guess? Or are you saying they had it for one tax season and then destroyed it?
  - cloakandswagger 10y ago
    Either they had it and destroyed it, lost it or did what lots of small businesses do and had a credit card or checking account only used for business, then referred against the statements to determine deductions (sans receipts)
    - ncallaway 10y ago
      Is an e-mail copy receipt sufficient for the IRS? As a small business, we travel a lot and obviously book travel online (as well as make a number of other business purchases online). I've never even considered that the e-mail receipt or purchase history on Amazon.com might not be sufficient documentation. Is this something I should spend the next half-hour researching, or am I concerned over nothing?
      - johncolanduoni 10y ago
        IANAL, but looks like it's addressed on page 9 here: https://www.irs.gov/pub/irs-irbs/irb97-13.pdf https://www.irs.gov/pub/irs-irbs/irb97-13.pdf I'd be shocked if it wasn't, since invoicing purely by e-mail is pretty common these days.
    - gamblor956 10y ago
      Receipts can be trivially documented by taking pictures with a cell phone at the time of purchase.... In my experience bank/cc statements have been sufficient documentation for smaller or recurring expenses.
- wbl 10y ago
  Anyone with W-4 and investments in a major mutual fund company probably doesn't have a problem complying with the tax law.
- gamblor956 10y ago
  If you choose to take a deduction, it's on you to keep the relevant documentation for that deduction for the period proscribed by law, generally 3 years. It's been a well-established principle of tax law for several decades, and there's really no excuse now that records can be easily and trivially digitized.
csomar 10y ago
Not in the US. Been 7 years into business. It's practically impossible to be 100% clean on deductions, receipts, reporting, etc... That, and I'm very strict by any standards.