Quote:
Originally Posted by Dvae
You don't understand, my hard drive crashed end of story, they will do nothing to me trust me.
|
Quote:
Originally Posted by Dvae
I know my rights. I'll plead the fifth.
Nothing will happen to me. It's business as usual.
|
Quote:
Originally Posted by Harmon
IRS doesn't give a fuck. Your guilty until you prove your innocence. If you don't have any documents to back up your deductions, you're fucked.
|
Hi Dvae,
Please trust me on this, you are making a mistake, and Harmon is exactly right. You ARE guilty until proven innocent when it comes to taxes. And the burden to prove your innocence is on you.
Here is the basics of what is going on. The government wants to review your financial records to see if you are paying the taxes that you owe.
If you can't produce any records of your expenses, the government will look at your income in your bank accounts (and Paypal and Paxum, Payoneer, etc), and ask that you pay tax on the total amount.
As a business owner, you are entitled to various kinds of tax deductions for expenses that you require for business such as office space, computers, etc, but you have to be able to prove these expenses. If you can't, you owe the entire amount. If you can, you're entitled to a discount.
You didn't say how far back they are going, but I'll assume they are going back 2 or 3 years. This isn't so bad and you should work with them to get the info they need. If they suspect you are hiding anything or if there is anything they don't understand, they could go back 5, 6 ,7 years or more. They may also decide to give you a personal audit, or a payroll audit, on top of the other audit.
Here's my advice. Do not claim that your hard disk crashed or deny any documents they request. Hire an accountant instead, and get all of your financial records in order. This will cost you some money but it is money well spent. Meet your auditor with your accountant and let your accountant do the talking. Cooperate with the auditor but only if you think everything is going smoothly. Auditors can overstep their bounds and if this happens, have a tax lawyer ready to jump in.
In Canada, the tax departments can make your life hell by charging lots of interest and even seizing bank accounts. In the US of course, you can go to jail for not paying taxes.
Being audited sucks, but it doesn't have to be that bad. Good luck!!