TFS Online Newsletter

TRUCKERS NOW PAY LESS INCOME TAX
AND SOCIAL SECURITY TAX...

The trucking industry is the most taxed industry in the Nation. With that said, the IRS and state income tax agencies still want more. So they came up with audit procedures that boggle the mind.

Judging by my phone calls, E-mail and regular mail the IRS has singled out truckers again for audits. BUT, wait this doesn't have to be the end of the world! IRS audits can and are won every day. You just have to be prepared.

In my business I do accounting and income taxes as if all are going to be audited and then there is less of a headache. First lets look at what you need to do if you are called for an audit.

The fist thing you should be doing regarding your income tax rights is keep records. Being able to support the entries on your income tax report is the most solid weapon in your anti-audit arsenal.

Prepare all receipts in the categories as they appear on your Schedule C or your Form 2106. Staple them together with a calculator tape on top. Keep and take them to the audit in a file box, shoe box or small box. Never take them in a paper bag.

You should rely on your right to a fair hearing. This includes a time and place that is convenient for you as well as the IRS. Just don’t ignore any IRS communications. And don’t panic should you receive notice that you are being audited. If you feel you need more time to gather your records, or if the date of the audit conflicts with a long planned trip to Disneyland, reschedule the date with the IRS.

At this point call your tax preparer and inform them of the audit. NEVER go to the audit alone. If possible have your tax preparer go to the audit without you, even if you have to pay him to do it. If heaven forbid you prepared your taxes yourself you can still hire a person called an Enrolled Agent or a Lawyer to represent you at the audit.

It has been reported widely that, if you’ve been audited once, you are likely to be audited at least one more time. However, if your latest audit notice repeats items on which you’ve been cited within the past couple of years and no adjustment was necessary, tell the IRS officials and ask to have the audit canceled.

Make sure the audit notice includes a list of specific records your are supposed to take to the meeting with the IRS. Take just those documents, and no more. If the IRS agent asks for other documentation during the meeting, ask for a request in writing and for the time to retrieve and return with them.

This prevents any misunderstanding when you return for the second time. And it will probably confine the second meeting to the topic for which you were asked to document.

If you encounter any dispute with the auditing agent, ask to talk with the examiner’s supervisor. These supervisors are more skilled and experienced than the front line agents and discussing your situation with him or her might lead to an immediate solution.

In all cases, focus on the problem and solution at hand. Shun any urge to make personal, emotional and other attacks on the IRS or its representatives. And don’t try to be funny. You can make the IRS examiner’s job easier and your task lighter by sticking to the subject at hand.

Whether you go to the audit by yourself or with a representative, the longest statement you make should be: “YES” or “NO”. Remember the old saying, “loose lips sink ships?” Well that goes double in an audit. Another note, don’t let the IRS come to your house or business, go to theirs.

You also have the right to appeal any adjustment you feel is unfair or incorrect. After your audit, you will receive a letter with the IRS decision. If you disagree with the decision, take your case to the IRS Appeals Office, which is more open to a compromise if you feel you have some room for negotiations.

If in the event the IRS makes adjustments to your tax return resulting in more payments, you must file an amended return with your state. Many times if you don’t, and the IRS does notify the state, the state audit is worse than the IRS!

Federal income tax, with its annual mid-April “deadline of doom” being just around the corner you must already be preparering for it. Keeping records, keeping records in a safe place, and organizing are the keys to a better prepared return and in the event of an audit, being ready willing and waiting.

Remember, 80% of truckers over pay their income taxes. The reason? Most tax returns are poorly prepared, records are not keep correctly, and lack of knowledge of tax laws that apply to trucking.

HAPPY MOTORING AND I WILL...SEE YOU AT THE TOP.

RUSSELL E. FULLINGIM, CTP