5 Things You Should Never Say to the IRS
Some truths in life — and business — are better left unspoken, particularly when it comes to federal taxes. If an unexpected tax bill or audit comes your way, bear in mind these five things you should never say to an IRS agent.
- "I'm going to fight this tooth and nail!" Expressing anger often escalates the situation. Scott Allen, CEO of Tax Debt Advisors in Mesa, Ariz., says that when discussions reach a sticking point, you should employ the "power of the pause." A complex tax case may necessitate a long-term relationship with an agent, and bad feelings will likely just complicate an eventual resolution. "We don't get mad," he says. "We pause and wait for them to say, 'Well you have a point, I guess we could agree with that.'"
- "I know I promised to pay, but ..." Before you make any promises to an IRS agent, be certain that you’re able to follow through, Bonnie Lee, owner of Taxpertise in Sonoma, Calif., told Fox News. Failure to fulfill agreements you made to pay an outstanding liability to the IRS may limit your ability to ask for leniency in the future. If, due to circumstances beyond your control, you anticipate missing a scheduled payment, call the IRS to explain the reason for the delay and indicate when the agency can expect a remittance.
- "I can explain everything." Mary King, a tax attorney in Sarasota, Fla., says that "the IRS actually counts on taxpayers who voluntarily give up too much information." She advises people to "respond politely and honestly to any questions posed by the IRS representative, [but to] limit your answers to the specific query at hand," particularly if you're undergoing an audit. Kelly Phillips Erb, an attorney and shareholder with The Erb Law Firm in Philadelphia, adds that business owners shouldn't panic. "Most of the time they’re giving you an opportunity to explain why what they’ve decided is wrong," says Erb, who also blogs as TaxGirl.com for Forbes.com.
- "Yes, you can come to my office." Don't invite a fishing expedition. You have the right to decline an IRS agent’s request to meet at your business (or your home), Lee says. If the agent is insistent, offer to record a video, which may resolve the issue. Meanwhile, if you are the target of a criminal tax-evasion investigation, and an IRS agent is at your door, it's time to retain an attorney, says Darrin Mish, a tax attorney in Tampa, Fla.
- "I'll blow up the building!" The IRS tells people who receive audit notices not to panic, but some still do. In December, Leonard Mackey of Easton, Pa., was sentenced to 15 months of probation for making a bomb threat in an IRS office. Mackey's ire was triggered by what was later described as an innocent clerical error that resulted in his wife receiving an $80,000 tax bill, Tom Shortell reported in The Express-Times of Harrisburg. The episode serves as a reminder that what you do say — "I'm sorry" — can be as important as what you don't say.