Best Practices in Tax Management
Someone sent me a link to “How to Audit-Proof Your Tax Return: Don’t e-File,” by Paul Caron. In it he quotes a plausible theory that “you are giving the IRS easy electronic access to information it would otherwise have to enter, enabling the agency to examine your return and mine the data more easily than it otherwise could.”
The article he’s quoting “Ten Ways To Audit Proof Your Tax Return” didn’t appear in some blog, it appeared in Forbes, and one might think they did some fact checking or something.
Now Paul is also credible. He’s Associate Dean of Faculty and Charles Hartsock Professor of Law at the University of Cincinnati College of Law. His blog asserts that it’s “the most-visited law-focused blog edited by a single law professor.” The Wall St Journal has called his blog a must-read. This isn’t some wacko.
I thought that was a neat idea, presented in a reputable magazine, backed by an apparent expert — a best practice, if you will — and sent it to my tax guy.
He wrote back:
One of my partners almost exclusively files on paper and his audit rate is no different than the rest of us who almost exclusively file electronically.
I love that my accountant is better than me at calling people on best practices. Thanks, Jeff!
(Yes, yes, to really test it, we’d want a larger sample, etc..)
And why should we trust your “tax guy”?
None,
Because he presents more data than the other side, who just offer a theory?
Err, more empirical analysis, not raw data.
Ok… so I don’t know how the government handles the data storage on this stuff, but I think its pretty ludicris to think they aren’t gonna mine your data because it was filed via paper. More work for them to put it in, yes. But work I’m pretty sure they are gonna do anyway.
I think your tax guy is probably right. But what do I know, I work in computer security 😀
From my experience working with government officials, they are incredibly lazy. I’d be surprised if they don’t eventually get it read into their systems via OCR, but I wouldn’t be surprised if they had a backlog and don’t get to it right away. In any event, I still see no reason why I should make life any easier for the government to steal my money and audit my tax return, which I sign under penalty of perjury.
I’ve been included in taxations for lengthier then I care to acknowledge, both on the private side (all my working life story!!) and from a legal standpoint since passing the bar and following tax law. I’ve provided a lot of advice and corrected a lot of wrongs, and I must say that what you’ve posted makes impeccable sense. Please continue the good work – the more individuals know the better they’ll be outfitted to deal with the tax man, and that’s what it’s all about.