IRS Audit....

[Vinayaka]

I own and run a small business and I am being audited for the year 2006. I don't have any physical paperwork for that year or previous years from 2006 except for the filed tax returns, payroll info etc., that has been kept at the accountants office. Reason for this being that in 2008 I had a flood in the basement and have proof from the plumbing company and insurance co describing the nature of the flood, what was covered, what was not etc., etc., . The bank I did business has shut their doors since last year. My concern is how does one provide physical evidence of business income and expences for a period in which one cannot account for.

[shield_2006]

Ask Motillal Moonan

[Redman]

LOL^^^^^^^

Just show them the proof of the flood and insurance claims-they prolly would advise you of the way forward
Keep in mind that youre innocent till proven guilty and if you have the other records, a reasonable person would come to the logical conclusion.

But at all times I would get formal advice from a paid tax attorney.
Good luck

Later

[saltwater]

I will hv to agree with Redman here.
But first question, what tax forms did you file. The rate of audits for small businesses filing 1040 Sch C is pretty high for many diff. reasons.
Inform the IRS of the flood and destruction of yr records, ask them if the Insurance claim docs will be adequate for their purpose. If yes, then you dont have a problem. If no, ask them what other docs will work and see if you can get them.
But shouldnt you be getting advise fm yr tax preparer on this matter. As far as i know a tax preparer/accountant must verify documents before preparing taxes and in case of an audit they are suppose to be yr support.
And you can always seek the advise of an experienced tax lawyer if you think you will have problems.

[lexbarker]

Don't fool around those IRS people. They are some of the most abusive gov. employees. They will bleed you dry to ensure their job and pension.

[Vinayaka]

Got the tax attorney handling it......thanks all!