Friday, May 29, 2009

If You Take A Walk I'll Tax Your Feet

So, what’s an IRS audit like, you ask? Well, it’s not all fun and games and pastries and making out, no matter what Will Ferrell and Maggie Gyllenhaaaaal would have you believe. In reality, it’s a lot more like having a very polite but unwelcome guest camped out in your office for two days. Or in my case, since my business is long-gone, in my dining room.

On the first day of the audit, there were actually two agents involved. One appeared to be supervising the other, which made me a little worried about what was going to happen when the supervision was lifted. The first two hours of the process were an interview that covered the details of my business management and financial record-keeping. We went over three years of tax returns and I was asked specific questions about how and why I got to each number reported. In several instances, the number on the form didn’t match the number printed out from my own books, so I was really at a loss to explain the difference. On the plus side, the numbers were mis-reported in a way that was unfavorable to me, so at least it didn’t look like I was fudging for my own benefit. Well, except for that big missing entry for the end of 2007 inventory total that falsely inflated my losses by thousands of dollars. But that was an accident! Or software error, or something! I swear! (I'll be talking to TurboTax about that soon.)

I also tried to use the interview to mention the hardships that surrounded and infiltrated my ownership of the store. I talked about the armed robberies, the break-in, the real estate debacle, as well as my own personal tribulations over the last couple years. When I finished, one of the agents said, “And now you get audited!” I chuckled ruefully and said, “Well, it seems a fitting end.” It seemed like they were sympathetic, but I know they’re all trained to be super-nice now, so it’s hard to tell for sure.

After the interview, the agents spent the day poring over my returns and all the paperwork associated with them. In a fit of unfounded confidence, I offered to provide the year’s cash register journals, a daily record that backed up the sales numbers I’d entered in Excel. And then … I couldn’t find them. Or worse, I could only find some of them. After May 2007, they were just … gone. Could I perhaps interest you in May 2006? No? Okay, I’ll … keep looking.

I tried to distract myself with other things, but I couldn’t help listening to the agents discuss every single little element. I heard them in a long discussion about my initial contribution to the partnership, which basically went like a point/counterpoint about whether or not the very foundation of the business and my stake in it was legally sound. So that was relaxing. I tried not to seem eavesdroppy, but if things seemed questionable and I had additional information to offer, I would bust in and offer it. But they were also unshy about bringing random pieces of paper to me and asking me to explain what was on them. Often repeatedly.

After eight hours, they went on their way. I spent the evening trying to figure out where I could have possibly put all those cash register journals and stressing about all the incongruous and missing information that had come to light during the day. And also, repeating one of their interview questions over and over in my head: why had I decided to file my business taxes myself?

The next morning, only one agent returned. This made the process a lot quieter, what with the lack of chit-chat and consultation, but it also seemed more stressful and official. There were a lot more questions, too, but unfortunately, not many answers. No, I could not explain why there was a difference in the inventory expenses I had on record and the amount on the return. No, I didn’t know why the same $203 in supplies appeared twice on my return. And no, I really and truly didn’t have a double-entry accounting system. My triumphant discovery of the missing cash register journals (14 months’ worth jammed into the “Current Month” folder in my file cabinet, of course) didn’t seem to impress her the way I’d hoped, either.

I didn’t imagine how my tiny little business could take as long to review as a larger corporation, but the second day dragged on well into the afternoon. It was 2:00 before she packed up all her files and peripherals and told me she would send me her report … by the end of July. What I may end up owing, or being owed (that’s the spirit!), will remain a mystery until then. The only thing she could tell me with some level of confidence was that I’d have to re-file an amended version of my 2008 return, to avoid another audit.

It’s always nice to have something to look forward to.

Wednesday, May 27, 2009

Reminds Me Of Childhood Memories

One of the more pleasantly surprising aspects of parenthood is the occasional reminder of the power of nature over nurture. The other morning, I asked Miss M what she wanted for breakfast, and she said oatmeal. But then she specified, “Apple cinnamon oatmeal, and not too … like, wet.” Now, I don’t think I’ve ever made this for her before, and I don’t recall her ever seeing me eat it. So it therefore seems striking that her favorite flavor, and preferred thickness, would be the exact same as mine.

Of course, there can be less pleasant reminders. At dinner the other night, I looked over to see that she had taken her Sister Schubert roll (or tea roll, as my people know them) and mashed it up into a doughy ball. Just like I used to do. I was torn between scolding her and telling her that it’s even better if you bite off all the crusty part first.

Monday, May 18, 2009

Cry For Help

I could easily write an entire new post, even longer than the first, about all my audit-related stress, but instead I'm going to try to think of other things. Like gorgeous May days, outdoorsy children, and the upcoming end of 5:50am wake-ups. And with all those pleasant late-spring things comes a question: what do you people eat? Our crew of nine is approaching the season of playing until dark, so we need food that is fast, simple, and will be considered edible by at least 60% of us. And yes, I think most people realize that Kristy does most of the cooking around our house, but things that can also be made by the, uh, culinarily challenged (stop laughing, Mom) are especially appreciated.

Easy, huh? But wait, before you pipe up, let me lay down the guidelines for this group:

R - no squash, bias against beans in the legume family (white, navy, pinto, etc.)
K - no mayo, no combining fruit and meat
A - no peppers, no mushrooms
C - no sauce
JP - nothing that isn't cheese pizza
S - nothing mixed together
M - no chicken. or beef. or pork.
GK - whatever, but she's only going to eat one part of it
Mr. B - no tomatoes (actual allergy, not just persnicketiness; he'd actually eat nothing but tomatoes if I let him)

Okay, whaddya got?

Wednesday, May 06, 2009

Declare The Pennies On Your Eyes

Oh, hey. Hi. How are you? Good, good. Me? Well, it’s been kind of a rough couple weeks. Got this letter from the IRS about my 2007 return. Seems they’d like me to take 10% of my vacation time so I can be “interviewed” about my business practices and take a look at my books from two years ago. Yes, the books from the business that closed. Because it lost so much money. That’s the one. At least the organizational effort of pulling together all my files and receipts and ledgers will give me a chance to dig out all the outstanding forms sent by various local business authorities and finally get around to officially informing them of my store’s demise. Maybe then they’ll stop sending me a $19 bill for the sign every year – oh wait, they know I’m closed, and they keep billing me anyway because the letters are still affixed to the empty storefront. That seems worth the administrative effort, doesn’t it?

What kills me is that the audit isn’t even about my reported losses or anything that potentially controversial. It’s some minor clerical stuff that is apparently wired to trigger red flags if improperly or inadequately described. Thanks, TurboTax! Way to tell me that was optional! I don’t begrudge the auditor for doing her job, but I have to admit, I hope she feels a little silly when she sees all the year’s info laid out in front of her. Especially when she gets to the part where I reported a loss from armed robbery, and I can casually mention, “Oh, yeah, that was from when I got held up. When I was pregnant.” A robbery that occurred, by the way, because all I did 98% of the time was sit alone in that store waiting for a customer. The guy who cleared my cash register had been wandering in there for ten minutes before demanding the money. He could have hung out another hour and there still wouldn’t have been a witness.

After I called the auditor and she described the process, she mailed out a list of documents that she’d like to review. I got it, read it, and then flipped it over for the part requesting unicorn whiskers and fairy snot, because I’d be just as likely to have those handy as the paperwork she’s expecting. I already told her that the business is closed, and that I had been the primary, and often only, employee, but I guess it’s going to take looking at my meager spreadsheets and register tape reports for her to fully comprehend the tiny scope of the operation.

In the meantime, I’m going to continue hearing the constant mental white noise of small business ownership stress, the noise I hoped would stop when I closed the doors last June but which keeps buzzing out of envelopes with official seals on the front.

So, um, what else is new?