APRIL 2003

• Immigration and Naturalization Service

• The New York City Mayor's Office Of Immigrant Affairs and Language Services

• Citizenship NYC

• New York Immigration Hotline

• National Immigration Forum

• Genealogical Resources in the New York Metropolitan Area

• America Immigration Lawyers Association and the American Immigration Law Foundation

• Lesbian and Gay Immigration Rights Task Force

• Glossary

Local: General

• Archdiocese of New York Immigrant and Refugee Services

• Citizens Committee For New York City

• Hebrew Immigrant Aid Society

Local: Specific

• Asian Americans for Equality

• Asian American Legal Defense and Education Fund

• CARECEN-N.Y.

• Chinese Progressive Association

• Emerald Isle Immigration Center of New York

• Korean Community Services of Metropolitan New York

• National Association of Korean Americans

• National Coalition for Haitian Rights

 

 

Tips For Tax Audits
From JoongAng (Op-Ed)
Feb 21, 2003

By Lee KyungLim (Certified Public Accountant)

We live in a nation of freedom. The founders of America left Europe and moved to a new land seeking freedom. Therefore, freedom is the most important value in America. There remains, however, one thing most Americans are afraid of — the tax audit. There could be nothing worse than having tax authorities chasing after you.

For those who file and review annual tax returns carefully and accurately, there's nothing to be scared of. Not all taxpayers, however, file the documents perfectly each year. In other words, the majority of taxpayers are fearful of tax audits because they inadequately file their taxes.

The possibility for one’s tax return file to be audited remains very low. Once facing an audit, one has to realize that the tax bureau will perform a thorough examination and one has to learn the rules of the procedure. Accordingly, one will be required to provide an accurate response to thorough questionnaires and examinations; if information provided does not correspond successfully, one could be given a large financial penalty and even worse— a criminal charge.

Even though only a small percentage of people will be under tax audit, we can find cases of houses or businesses closed or sent to an auction as a result of a tax audit. We have to realize that these events can happen to us too.

Mr. S, who runs a deli, received a notice of a sales tax audit by New York State. Many transactions of the deli, such as the purchase of products and the sales expenditure, were done through cash. Therefore, it became hard to report an accurate record of expenses and deductions. The accountant first hired to respond to the audit accepted the charge of a tax audit without any review and told Mr. S that he had to pay the entire amount charged. This totaled about $ 120,000 and including the penalty and interest became about $150,000.

Facing a serious financial difficulty and disappointed by his accountant, Mr. S came to me and asked me to take his audit record and try to lessen the charge. After a careful review, I realized that the tax auditor had calculated the revenue of the deli by only counting customers during the morning and lunchtime hours, when the store is the most crowded. From these customer numbers, he calculated the customers’ expenditures, and multiplied by 10 hours, the store’s hours of operation. The calculated result, thus, was much higher than Mr. S's actual revenues, and the tax charge under this audit was much higher than it should have been.

I argued that about four-fifths of the daily revenue were earned during the four hours from morning to lunchtime, and proved this by showing the recorded video tape which showed the hourly sales income in the deli. As a result, the charge was decreased to around $50,000.

The process required many correspondences and arguing with the tax auditor, his supervisor and me. Despite these struggles, we won the case based on the grounds of reason and common sense.

Additionally, Mr. S was called for the tax audit every year in the past three years, another reason why Mr. S was dissatisfied with his previous accountant. There should be reasons why he received audit notices and paid for the charges three times. An unreasonably low revenue report, relatively low payroll or income of the owner, relatively low percentage of selling tax returns, or other unreasonable reports of tax returns can all be the possible reasons. Unless Mr. S corrects any one of these in the next year, he can again be called for a tax audit.

The number of Korean Americans in this country sharply increased since the 1970s and they are settling as a middle class. Thus, it becomes important to protect their household and businesses, which were obtained by hard work in investment or other legal means. Also, consulting with professional accountants and getting ready for tax audits by filing thorough and accurate tax returns every year should be necessary and can make one a wise tax payer.

Translated From Korean by JooYeon Lee

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