My husband, Richard, and I were in the cubicle with the Branch Manager at Bank of America, opening a bank account for the 501 (c) (3) charity we had recently started.
Our backs were to the tellers and when we were sitting down, you really couldn’t see anything. If we stood up, though, we would have been able to see through the Plexiglas tops of the cubicle walls. The Manager got a message on his phone. He briefly looked at it and then said something strange.
“If you don’t move, you should be safe,” he said. His attention was clearly on the tellers.
I started to speak and he gestured, with his finger to his lips, to be quiet. I looked at Richard, puzzled, but he seemed to have picked up on what was going on faster than I did.
I watched a man walk hurriedly by the cubicle on the way out the front door. He was wearing a hoodie, keeping his head low and carrying a full paper grocery bag.
I’m sometimes very slow to pick up on things. At the time, it didn’t even register. I was still trying to puzzle out what the manager had meant when he cautioned us to stay seated and be quiet.
Once he left, a teller ran to the front door and locked it.
The manager left us alone in the cubicle. Police showed up. We were interviewed. No one actually told us the bank had been robbed, we just picked it up from the bits of conversation that floated by the cubicle we were in. No one was hurt in the bank robbery. It turned out he had brandished a weapon, but it was a toy gun. He was caught later that day and he still had the grocery bag of money from the tellers.
When things are going on that you don’t understand or that are dangerous, sometimes the best thing to do is keep your head down and wait. That’s what is going on with the IRS right now. They have been back to work for just barely a month and are focusing their efforts on just a few very specific projects. If they don’t contact you, let sleeping dogs lie. Don’t stir up anything. If you’re waiting on an audit result, don’t ask. Let it be.
In tomorrow’s blog I’ll tell you about a strategy to get your IRS debt forgiven easier than you might expect. The people who are under IRS scrutiny are:
- High-net-worth individuals and private foundations. They will coordinate examinations through disregarded entities (Schedule C and E), partnerships, S Corporations and trusts. In 2004, the IRS defined high net-worth as $1.5 million and above.
- Conservation easements. There are legitimate purposes for this type of easement, and the resulting tax breaks. But they have been abused too many times and now the IRS is clamping down.
- Reinsurance trusts and captives. Some taxpayers have set up their own insurance companies. They pay a large premium to the insurance company which is a deduction for the business. It’s not taxable for the insurance company because they can accrue for a future possible loss. The IRS says you can’t insurance yourself so that you get a deduction on one side and no income tax on the other.
Before coronavirus, the IRS reached a settlement agreement with individuals who had used captives before. They owed tax, but they wouldn’t face the really onerous fraud penalties. That agreement is still in place.
Cryptocurrency continues to be a target. The IRS believes that a lot of taxable events are not being properly reported.
That’s the targeted list. It doesn’t mean you’re home free if you’re not involved in one of those, but it does mean your audit risk is a lot lower.
Forewarned is forearmed when it comes to the IRS. The more you know, the better. Here’s what to do if you have an IRS penalty (or are afraid you’re going to get one) or if the IRS contacts you.