Last year, I finished a two year on going battle with the IRS. They lost a form and in place of my paperwork they made a wild estimate which would have made that quarter the best quarter my company has ever seen. I kept trying to straighten it out myself, but couldn't get anywhere, so I put my accountant on it like I should have in the first place. He convinces them that it was their error.

During this process they had withheld about $4000 from a personal income tax refund and applied it to what they thought was my debt. Amazingly, when they admitted their mistake, they erased what I owed and the penalties giving me a balance that was nearly zero. Somehow my $4000 just magically disappeared. Call it the fruits of accounting with an end result in mind.

My accountant told me to leave it alone and be happy they admitted their mistake.

I was listening to Abraxas yesterday, too.

My experiences with the IRS have always been pretty cordial. I have worked for companies in Chapter 11, and for a theatre company the director of which had been embezzling money he said had been sent to the IRS leaving the company owing them about 40 grand. I recently spent a couple years trying to get my company declared a 501(c)(3) - not being _exactly_ a theatre company it took a lot of convincing (they really aren't good at doing things that they haven't done before). But they have always been reasonable, and willing to work with me/them/us.

I bet job turnover is pretty high. Would you want to talk to angry people for a living? How about people who weren't angry, but are now because you showed up?

My father is an accountant in Newport Beach, and he has dealt with a number of interesting audits in his day. E-mail me if you'd like his information.

somehow it seems better to have an agent familiar with your case than a bunch of letters, that are usually repsonded to by some large form and hard to grok -IwishThisWasHypertextForAllTheReferencesOrExcelSoIDidn'tHaveToBreakOutACalculator-

Are updates going to be in your journal, or on no-treason? I haven't filed a return in the past either for similar reasons. But seeing as I'm not a homeowner, it may not even show up on the radar.

I think they prioritize based on what they think they can get out. The years I didn't file was next to minimal income that would have shown up, and this year i was a 'good boy' and am still paying back taxes for last year.

it doens't seem possible to run a corp here and not play nicely with the IRS.

Oddly enough, I went through almost exactly the same thing two months ago -- only I didn't get a phone call, just a nice little letter stating that I owed about $400,000 in unpaid taxes, plus penalties for not filing. My income for the year was actually about $5000, but, just like they did for you, they totaled up all the 1099's for every time I sold a stock, regardless of what I'd paid for it, and I'd done some day trading. This is a ridiculous policy, as it would be just as easy for them to calculate the stock gains, rather than just total the amount stocks were sold for. Seems a case of guilty before proven innocent. Anyway, I didn't think I had to file, since I was under the $7K limit, however, it turns out that if you have 1099 income from consulting that is over $400 you do have to file and pay a nice hefty tax on it -- mostly social security. I don't know how you managed to have W2's from consulting, but if you get 1099'd in the future, figure on paying tax on it.

Oh, and I just realized that your taxes will probably look much like mine for those same two years -- and it wasn't the 1040EZ... The self employed get hoised. So, if you'd like, email me a number I can fax them to and I'll send off my taxes for you to checkout and maybe use as a template.