Not a big deal, but thought I would post a quick question regarding an IRS audit to see if anyone has information that could help us out. We received a “public relations” letter questioning our deductions the year we filed for BK and are now in the preliminary stages of an audit. The year in question we attempted to keep what we had but ended up losing everything in the process, hence the BK. We lost way more than we took in and basically paid little in taxes and receive a refund due to all the deductions. We have been discharged/closed for over a year now.
I am not worried from the point of view of proving the deductions (we have receipts, never lied or embellished our filings) and have used a competent CPA to file for us. The CPA is currently guiding us through this. Where I may get a little concerned about our situation is the agent is basically judge and jury and they get a portion of the money they collect back. Not much incentive for impartiality IMO and may decide not to accept certain deductions for any reason they can think of.
My question is what role could or would our BK play when it comes to an audit especially if we are found to owe money back? Has anyone been in this situation?
I am not worried from the point of view of proving the deductions (we have receipts, never lied or embellished our filings) and have used a competent CPA to file for us. The CPA is currently guiding us through this. Where I may get a little concerned about our situation is the agent is basically judge and jury and they get a portion of the money they collect back. Not much incentive for impartiality IMO and may decide not to accept certain deductions for any reason they can think of.
My question is what role could or would our BK play when it comes to an audit especially if we are found to owe money back? Has anyone been in this situation?