Currently, the IRS auditor as we have experienced them do not operate like they have traditionally. It used to be that you can support your deductions by just showing your receipts. But in the last several years we have witnessed auditors do what we believe is making up their own interpretation on the rules.
Let’s look at expenses in general. The want you to prove the business purpose, that it was prudent to incur the expense, that it was for the purpose you say it is, that it meets the code and regulations, etc.
Now when it comes to employee business expenses, they want to have evidence that it was a condition of employment, so much so, that if you didn’t incur them you would not be allowed to have the job. We believe that is a substantial change from the original intention of the code.
If auditors want to really go after you, they go through your bank account and made all of your deposits income unless you can prove it’s not. You never want to face an auditor yourself, even if you are an attorney or an accountant. We have represented many attorneys and accountants before the IRS because of our vast experience in dealing with them. I can show you how to prevent and audit. That’s the subject of another post.