One way to deal with a tax audit ...

[rearguard]

I thought I'd share this story since I do trust the source to be accurate.

I'm in Canada, and the PST stands for Provincial Sales Tax. The tax is added onto every retail item that a company sells as a percentage of the sales price.

The PST people decided to audit a freind of mine who owns a small business.

They wanted to see all of his financial records, including his general ledger.

What he did instead was to dump all of his sales receipts into a box. He stirred it up real good, and said: "Here you go these are all of my sales receipts, this is all I have and its what I'm obligated to give you."

Well the PST people were not impressed and they wanted him to clean up his records, and have his accountant prepare proper financial statements.

Well, after some back and forth arguing, he held firm, refused to sort up the mess of records, and refused to provide proper financial records at his expense.

Eventually the PST people left ... it's been about 2 years now and they still have not returned.

I imagine such a strategy won't always work, and certainly won't work if the business is significant enough. It all boils down to profits, and if the audit is deemed to be not profitable to the tax collector, then there likely won't be an audit.

[rushpat]

Good story... I believe there are only 3 ways the tax man will leave you alone:

1) Use of Force (law suit)
2) Threat of the Use of Force
3) Not worth the effort

[iamfreeru2]

I have a story for you. A friend was called in for an IRS audit in California a few years ago when I lived there to bring his books and records in. What he took was cook books and phonograph records. When the IRS agent saw this he was furious. Well the tax audit lasted about 30 seconds and that was it. That was too funny!! Ha Ha Ha

Anther way to take care of an audit is to claim the Fifth Amendment protection against self incrimination. You cannot do it as a blanket statement, but for each individual question you claim the Fifth. Audits are usually over very quickly.

Yet another way is to bring a CD-ROM image of your records in a locked briefcase. The IRS obliges you to bring your records with you to an audit, but can't impel you to hand them over.

[mameye]

Here is one for you. I had a friend in Maryland that got called for an audit. I told him to scan all his records into digital files, copy them to a CD Rom and then encrypt the whole mess.

Then I said to make about 10 copies. Give em out to every goon he sees. That way he would be in compliance.

He did it and the IRS was floored that everything was neat and tidy and in electronic format. They thought their job was going to be sooooo easy. It wasn't 3 days later he got called by the goon saying that all the disks were corrupted and that he would have to bring in paper records. My friend laughed and said that all the paper records had been destroyed in the interest of his personal security and that the disks were not corrupted, they were encrypted. He even told them what software he used to encrypt the disk so they could open them.

Three days after that they called again and told him that they needed the password. He laughed again and gave them one. It opened some of the root level folders but not the files.

He had these guys going nuts trying to get the data. He finally wrote the supervisor a letter complaining about the clod that kept calling him. He said that he had complied by providing all the records he had - exactly as the notice had said. Then he threated both the goons with a lawsuit if they didn't stop harrasing him.

He got a letter about 6 months later stating that there was nothing wrong with his return and the audit was completed succesfully.

Got to love that. I think it was funny that he even provided a password to the goons. The frustration level in that office must have been higher than the moon.

Love it

[BOBT12]

That is great. It looks like the agents at the Internal Rectal Service (IRS) got what they deserved. Let's keep it coming.

Pooh-ya!