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[whitespace] Avoid Audits

By Will Harper

As anyone with a repetitive, detail-oriented job will tell you, only the really obvious things get noticed. The folks at the Internal Revenue Service are no exception.

The basic rule of thumb is: Use common sense when trying to cheat the government. One tax columnist cautions that a person making $50,000 a year is unlikely to have enough disposable cash to donate $10,000 to charity. That one will set off all kinds of alarms for government nitpickers. Just in case their own people are a little bleary-eyed after April 15, the IRS uses a computer program that compares deductions on returns in the same income bracket, looking for deviations from the norm. Fat deductions are guaranteed to draw attention.

Peter Beall, a Bay Area tax accountant whose company handles 600 to 700 returns a year, says he usually has a good idea about which returns will attract IRS attention when he's preparing them. Several deductions with lots of zeroes at the end "cry out and beg, 'audit me,' " Beall says. This is especially true for self-employed types or salespeople who claim major deductions for car mileage or meal and entertainment expenses. "The IRS assumes most people aren't keeping as meticulous records as they should" on these type of expenses, tax accountant Peter Beall says.

The IRS suggests that people keep a log in their car to record trip distances. Because most people aren't that detail-oriented, Beall suggests that taxpayers keep their appointment books, which can substantiate some business travel claims. Obviously, receipts are always a good thing to have.

Even if taxpayers do everything carefully, keep receipts and avoid hyperbole, they still might be audited. That's because the IRS also red-flags returns at random.

God bless Uncle Sam.

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From the March 16-22, 2000 issue of Metro, Silicon Valley's Weekly Newspaper.

Copyright © 2000 Metro Publishing Inc. Metroactive is affiliated with the Boulevards Network.

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