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Posts Tagged ‘Fear’

4 Tips for Overcoming Fear and Attracting Clients You Love

The legend of the brutal IRS audit is one we’ve all heard about. Somebody will one up by mentioning the friend of a friend who was audited two years in a row! So, is there any truth to this? How often can the IRS audit you?

The IRS uses tax audits for a couple of reasons. The first is simple. The IRS estimates there is a $345 billion dollar tax gap every year. This means we, the taxpayers, are shorting the agency on this amount. The tax audit is designed to try to close that gap. This is done by making individuals and businesses prove their deductions and such.

The second purpose of the tax audit is to “motivate” taxpayers to comply with the tax rules. Frankly, the IRS is happy you and I are terrified at the prospects of being audited. Why? Because we are much more likely to pay every penny we owe each year. Put another way, fear equals revenues!

Regardless of the purpose, is it true the IRS can audit you two years in a row? Unfortunately, the answer is yes. In fact, the agency can do it three, four and five years in a row. At this point, even the IRS will invoke a mercy rule. It has announced it will not audit a taxpayer on the same issue five years in a row. Of course, it could look at something else!

Isn’t that great news? Well, not really. Can you imagine being audited FIVE YEARS in a row. It is hard to imagine things getting much worse than that. While the IRS might let you go after five years, it is hard to imagine a scenario where you would come out in good shape. Even if you ended up owing nothing, you’re nerves would be frazzled beyond belief!