Yesterday the RDTC Tax Help Blog posted a new blog entry celebrating the Halloween season with some chilling tales of IRS horror stories. For most of us, ghosts and witches are only really scary in horror movies. In real life, one of the scariest things that can happen to an adult is to find a letter form the IRS in the mail. Check out the following three examples, or check out Halloween and Taxes: Top IRS Horror Stories on the RDTC Tax Help Blog for the full article.
1. A Cayman Islands Vacation Gone Bad
When most people hear the words “Cayman Islands” they probably think of a relaxing Caribbean vacation. However, many might also think about illegal tax shelters, as the islands are somewhat infamous for hosting the private bank accounts of many American tax evaders. A few years ago, Joe ran into a few problems of his own in the Cayman Islands. He and his business partners used to vacation in, and bank in the islands on a regular basis, until Joe’s vengeful ex wife got wind of the situation. She tipped off the IRS and Joe found out about it one afternoon when 25 federal agents stormed his home and business, ceasing all kinds of financial information. Joe was considered a flight risk and imprisoned under $5 million bail. It took dozens of court cases, and thousands of dollars in legal fees to prove his innocence, and resulted in a major lifestyle change for Joe.
2. The Audit of Endless Receipts
Auditors are notorious for being difficult every now and then when it comes to documenting expenses and qualifying for credits, but usually leave a little leeway. However, this was not the case for a taxpayer named Heather who was audited by what she now refers to as the world’s most relentless auditor. She claims that the auditor in question hounded her for not only proof of her business expenses, but receipts for every single personal and professional transaction made over the past two years. The auditor supposedly made her scrounge up receipts for transactions for as little as a dollar or two. Needless to say, Heather could not find every document required and faced several penalties.
3. They Came with Guns
Restaurant owner John Colaprete woke up one March morning in 1994, unsuspecting of the terror that would soon be at his doorstep. That afternoon, gun-wielding federal agents stormed his home, his restaurant managers home, and his two restaurants with no explanation and no apologies. John, a former marine, was in total shock and had no idea what could cause such a raid. It turns out one of Johns former bookkeepers, who had been fired for embezzling from her employers, had gone to the IRS with a horror story of her own. However, she fabricated her story in order to cover her own mistakes and told the IRS that John was involved in both money laundering and gun trafficking.