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Thread: Have any dancers or camgirls received one of these IRS Letters ?

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    Default Have any dancers or camgirls received one of these IRS Letters ?

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    (snip)"Small business owners across the country are receiving letters from the IRS questioning if they are reporting all of their cash income, in a new push by the agency some are saying could unnecessarily create fear in the small business community.

    The Wall Street Journal reports the initiative is an attempt to respond to what the agency feels is a widespread failure by small businesses to report all their cash sales.

    The agency says the letters are not the same as an audit, and it is simply seeking more tax information from the businesses. However, some lawmakers and business owners who received the letters say the initiative is alarming.

    "There's an emotional thing when you get a pretty ominous-looking letter from the IRS, [saying] you might have done some bad things," small business owner Tom Reese tells the Wall Street Journal. "I really work hard with my accountant to make sure that I not only follow the law, but follow the letter of the law."

    One letter the IRS sent is headlined, "Notification of Possible Income Underreporting." It notifies the business owner "your gross receipts may be underreported" and says they must complete a form "to explain why the portion of your gross receipts from non-card payments appears unusually low."

    One lawmaker says the letter’s tone implies wrongdoing from the start.

    "The letter implies that this is a serious matter that could lead to assessments of additional tax, penalties and interest," says a letter sent to the IRS Friday by Rep. Sam Graves, R-Mo., chairman of the House Small Business Committee.

    Though the IRS has only sent letters to small percentage of businesses so far, around 20,000 of the estimated millions in the U.S., the agency says they hope to expand the program in the coming months.

    One small business owner says the initiative will likely create fear among business owners"(snip)

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    I find it hysterical that Foxnews is using the Wallstreet Journal as a reference. They are both owned by Rupert Murdoch.

    I think this is just fear mongering by Murdoch in the wake of the non existent IRS scandal.

    Small businesses report all their income as a whole on returns. They are not required to specify how that income was received.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    My uncle owns a small business and is being hounded by the IRS which is claiming he owes more. He's also involved in the NRA and a Republican. Coincidence? who knows.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    I know a liberal tax attorney who has been audited and hounded by the IRS. He donated to Obama's election many times. Coincidence? who knows
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    Doesn't matter, the IRS is a big scam who steals money from tax payers.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    I was just trying to ask a straight-out question !!!

    The uptake from the WSJ article was that the IRS now 'appears' to be closely examining reported small business income in regard to the percentage of 'documented' income ( which in the case of dancers would be 1099's ), versus the percentage of 'cash' income ( which in the case of dancers would be tips and other cash payments ), and sending official inquiries to small busineses where the percentage of reported 'cash' income falls below some IRS benchmark value.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    Quote Originally Posted by Melonie View Post
    I was just trying to ask a straight-out question !!!

    The uptake from the WSJ article was that the IRS now 'appears' to be closely examining reported small business income in regard to the percentage of 'documented' income ( which in the case of dancers would be 1099's ), versus the percentage of 'cash' income ( which in the case of dancers would be tips and other cash payments ), and sending official inquiries to small busineses where the percentage of reported 'cash' income falls below some IRS benchmark value.
    1099s include cash income. the irs cannot prove we received any cash beyond that so its a moot point.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    I was Audited by NYS and got one of those crazy letters,still dealing with the shit.Never ever go too H&R Block,they suck!The ashole who did my taxes dropped this shit in my lap and handed me the paperwork and told me too have a nice life.They do not help you if you are Audited.His manager wanted a list of everyguy I did a stag party for.WTF!That would kill my buisness giving out personal info that I basically promise on the contract not too give out.I think we voted for the wrong guy,and I am sad about it.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    1099s include cash income. the irs cannot prove we received any cash beyond that so its a moot point.
    Unfortunately, these days the IRS does not need to prove that a particular person received cash beyond the amount reported on their business tax return. The IRS can use bank statements, credit card statements, credit bureau reports, college bursar's office reports, property title agency lienholder reports, motor vehicle title agency lienholder reports, etc. to determine how much after tax money a person is actually spending. The IRS even has a database of typical costs of living for every different zip code area ( based on local utility rates. local rent costs, local costs of groceries etc. ) to assist the IRS to estimate a person's after tax total spending.

    The IRS can then compare this estimated amount of total after tax spending with the amount of after tax money the person should have had left over based on the info provided on their tax return. If there is a disparity, the IRS can simply arrive at an estimate of how much money the person must have actually earned in order to support their actual spending and costs of living ... and to send that person a bill for additional taxes . It then falls to that person to prove that they didn't actually earn the amount of money which the IRS claims they did ... a virtual impossibility where a 'cash' business is involved.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    My 1099's only include funny money and I had to add cash tips on my own. If I made more one year in funny money than the previous year, I adjusted it accordingly and payed taxes on that, too.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    ^^^ I guess this point ... the IRS expecting to see a certain percentage of 'cash' income being reported on top of the 'documented' income reported by small businesses ... is at the heart of these IRS Inquiry Letters.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    As usual, Melonie is right. The IRS has been hounding taxpayers for years. The "good old days " of the all-cash "underground economy " are long gone. Inter alia , the IRS uses algorithms that extrapolate income based on spending. N.Y. State has been doing it to bars and restaurants for years to estimate how much income and sales taxes they ought to be paying.. The OLD basic rule of thumb was that dancers ought to declare at least half their cash income and ALL their funny money etc. That is no longer good enough. Invest in a good CPA and pay what she or he tells you to.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    Quote Originally Posted by Melonie View Post
    Unfortunately, these days the IRS does not need to prove that a particular person received cash beyond the amount reported on their business tax return. The IRS can use bank statements, credit card statements, credit bureau reports, college bursar's office reports, property title agency lienholder reports, motor vehicle title agency lienholder reports, etc. to determine how much after tax money a person is actually spending. The IRS even has a database of typical costs of living for every different zip code area ( based on local utility rates. local rent costs, local costs of groceries etc. ) to assist the IRS to estimate a person's after tax total spending.

    The IRS can then compare this estimated amount of total after tax spending with the amount of after tax money the person should have had left over based on the info provided on their tax return. If there is a disparity, the IRS can simply arrive at an estimate of how much money the person must have actually earned in order to support their actual spending and costs of living ... and to send that person a bill for additional taxes . It then falls to that person to prove that they didn't actually earn the amount of money which the IRS claims they did ... a virtual impossibility where a 'cash' business is involved.
    Do you know of any cases where this happened?

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    Quote Originally Posted by Melonie View Post
    Unfortunately, these days the IRS does not need to prove that a particular person received cash beyond the amount reported on their business tax return. The IRS can use bank statements, credit card statements, credit bureau reports, college bursar's office reports, property title agency lienholder reports, motor vehicle title agency lienholder reports, etc. to determine how much after tax money a person is actually spending. The IRS even has a database of typical costs of living for every different zip code area ( based on local utility rates. local rent costs, local costs of groceries etc. ) to assist the IRS to estimate a person's after tax total spending.

    The IRS can then compare this estimated amount of total after tax spending with the amount of after tax money the person should have had left over based on the info provided on their tax return. If there is a disparity, the IRS can simply arrive at an estimate of how much money the person must have actually earned in order to support their actual spending and costs of living ... and to send that person a bill for additional taxes . It then falls to that person to prove that they didn't actually earn the amount of money which the IRS claims they did ... a virtual impossibility where a 'cash' business is involved.
    well obviously if your bank statements etc don't line up with your taxes then youll get audited. thats always been true and I different from your op which basically implied that even if your finances were all perfect the irs could randomly assign penalties based off of false accusations and heresay.

    arielbriel I know some clubs do only funny money 1099s but not all clubs and the irs doesn't audit based off of which club you worked at and how much extra cash you declared.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    Quote Originally Posted by Eric Stoner View Post
    As usual, Melonie is right. The IRS has been hounding taxpayers for years. The "good old days " of the all-cash "underground economy " are long gone. Inter alia , the IRS uses algorithms that extrapolate income based on spending. N.Y. State has been doing it to bars and restaurants for years to estimate how much income and sales taxes they ought to be paying.. The OLD basic rule of thumb was that dancers ought to declare at least half their cash income and ALL their funny money etc. That is no longer good enough. Invest in a good CPA and pay what she or he tells you to.
    lol every cpa ive talked to says as long as you don't have any red flags, you have no reason to be worried if you underreport. most of my friends report 1/5th of their income and have never been audited. I report much closer to my actual income but since I was able to write off tuition and beauty ive never had to pay anything. ive read here about the "housewife test" but that really isnt enforced. my cpa works primarily for actresses and models in la and he writes off all of our botox, makeup, etc and never gets audited. you just need a cpa that has a good reputation.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    Do you know of any cases where this happened?
    Yes two Manhattan dancer 'friends' who drew IRS attention as the result of registering fairly expensive new cars. The IRS 'estimated' that their actual incomes had to be significantly higher than the amounts they had reported on past tax returns in order to be able to 'afford' to spend this amount of money. The IRS then sent them deficiency notices seeking tens of thousands of dollars in additional taxes.

    They were left with the choice of accepting a settlement requiring them to pay a 'reduced' amount of additional taxes, or having their accounts / assets frozen for months while they attempted to prove in tax court that they did NOT actually earn the amount of money that the IRS was 'claiming' they did. It's very difficult to pay a good tax attorney with frozen assets !!!


    my cpa works primarily for actresses and models in la and he writes off all of our botox, makeup, etc and never gets audited. you just need a cpa that has a good reputation.
    I have heard other anecdotal evidence that this is indeed the case ... and especially so when the audit interest originates with a state income tax agency.
    Last edited by Melonie; 08-14-2013 at 03:46 AM.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    Sorry to burst a few bubbles but starting under Clinton the IRS started to get much more aggressive in going after under and unreported incomes.
    They look at MORE than just your bank records. They focus on your spending and use various formulas to determine how much income would be needed to support such spending levels.

    Yes, costumes , hair , make-up, travel expenses etc. are deductible. Any reasonable and necessary expense is. That is NOT the issue.
    Can you fudge your figures and get away with not declaring some of your cash income ? Of course, but the percentage NOW is a LOT lower than it used to be. Any good CPA who knows what she or he is doing will tell you to declare most of your cash income.

    The downside can be a real downer as Melonie points out. With the IRS and state tax authorities you are guilty until proven innocent.

    Are there red flags to avoid ? Sure. Don't live in a luxury condo ; don't drive a Mercedes : don't send your kids to Groton ; stay away from Gucci , Coach and Fendi. Where are you going to put your money ? Overseas ? The Swiss are becoming blabbermouths. Under your mattress ?
    There are a lot of things to think about to avoid an audit and other IRS problems.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    ^^^ all true, but somewhat beside the point of my OP.

    There are now many reports that the IRS has begun to send out thousands of inquiry letters to small businesses ... with the arguable intent of increasing income reporting accuracy thus tax collections. My business acquaintances tell me that this is, at least in part, the result of ObamaCare having authorized the IRS to hire some 8000 additional agents ... 8000 additional agents who now aren't able to do the job that they were specifically hired to do since US businesses have recently been given a year's extension on complying with ObamaCare reporting and insurance / IRS penalty requirements.

    Thus my direct question to dancers as to whether the IRS has recently sent them an inquiry letter.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    Not yet. Praying that they leave me alone. I payed taxes on an estimated amount of cash..

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    Quote Originally Posted by Melonie View Post
    ^^^ all true, but somewhat beside the point of my OP.

    There are now many reports that the IRS has begun to send out thousands of inquiry letters to small businesses ... with the arguable intent of increasing income reporting accuracy thus tax collections. My business acquaintances tell me that this is, at least in part, the result of ObamaCare having authorized the IRS to hire some 8000 additional agents ... 8000 additional agents who now aren't able to do the job that they were specifically hired to do since US businesses have recently been given a year's extension on complying with ObamaCare reporting and insurance / IRS penalty requirements.

    Thus my direct question to dancers as to whether the IRS has recently sent them an inquiry letter.
    I was trying to address some of the overly optimistic responses to your O.P. Btw, you are right : The lamestream media FINALLY got around to reporting on the 20,000 letters the IRS sent out to small businesses along with some political reaction to same yesterday. Presumably the 8,000 new IRS personnel are not going to sit around twiddling their thumbs. If not needed to enforce various Obamacare provisions at present they could very be assigned to harass ( I mean review ) small businesses.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    Quote Originally Posted by Melonie View Post
    ^^^ all true, but somewhat beside the point of my OP.

    There are now many reports that the IRS has begun to send out thousands of inquiry letters to small businesses ... with the arguable intent of increasing income reporting accuracy thus tax collections. My business acquaintances tell me that this is, at least in part, the result of ObamaCare having authorized the IRS to hire some 8000 additional agents ... 8000 additional agents who now aren't able to do the job that they were specifically hired to do since US businesses have recently been given a year's extension on complying with ObamaCare reporting and insurance / IRS penalty requirements.

    Thus my direct question to dancers as to whether the IRS has recently sent them an inquiry letter.
    well we arent small business owners so again, doesn't seem like this means anything.

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    Default Re: Have any dancers or camgirls received one of these IRS Letters ?

    ^^^ oh, are you an 'employee' dancer or camgirl who receives a weekly paycheck from a strip club or webcam studio ? Not meaning to be argumentative, but if not, then you are a small business owner in the eyes of the IRS !!! Independent contractor dancers and camgirls must report their earnings using a form called Schedule C - 'Profit or Loss from a Business' !

    And where independent contractor dancers are concerned, they are small business owners operating in a business segment that is heavily 'cash' oriented that also has a very poor history of tax compliance !!! Thus if the IRS is indeed stepping up efforts to investigate under-reporting of 'cash' income by small businesses, logic would indicate that independent contractor dancers might be 'fertile' territory for IRS attention. Thus my OP !


    I was trying to address some of the overly optimistic responses to your O.P
    Understood ! And in reality I have no way of knowing whether or not those responses are overly optimistic, versus being realistic. That's why I asked the original question about dancers and camgirls receiving inquiry letters.

    The real aggravation about such issues is that there is so much 'lead time' involved between the time one hears that the IRS is (apparently) taking new enforcement action, and the time that said action actually results in concrete reports of audits, deficiency notices etc.


    With the IRS and state tax authorities you are guilty until proven innocent
    While this not 'officially' the case, the de-facto situation seems like it. In the case of my Manhattan dancer 'friends', it basically came down to the IRS producing 'evidence' of higher than reported earnings based on the algorithmic spending versus income calculations that Eric Stoner spoke about, with my Manhattan dancer 'friends' then being placed in a position of having to refute that 'evidence' via other documentation ... something which they couldn't really do since a major portion of their income accounting 'numbers' were inherently based on self-documented self-reported 'cash' transactions without available 3rd party corroboration. I am told that my Manhattan dancer 'friends' received legal advice that the tax court would very likely take the position that, regardless of the actual accuracy of income accounting / reporting, their self-documented self-reported business income records were probably of dubious credibility ( i.e. a 'work of fiction' ). Thus they were advised to accept the settlement offer to minimize the amount of additional taxes to be paid as well as to minimize legal fees.

    In fact I called one of my Manhattan dancer 'friends' for more details. She told me that she had to basically choose from the following options ...

    - accept a settlement offer requiring the payment of ~$10,000 in additional taxes plus paying ~$1000 in legal consultation fees

    - dispute the issue in federal tax court. Best case scenario, zero additional taxes but ~$5000 in attorney / accountant fees ( not counting expenses, lost income due to court appearance(s) etc. ). Worst case scenario, ~$20,000 in additional taxes plus ~$5,000 in penalties and interest charges, in addition to the ~$5,000 in attorney / accountant fees ( not counting expenses, lost income etc. )

    In general terms, this is known as a 'no-win' situation !!! The presumption for small businesses appears to be that the minimum amounts of money involved to prepare for and offer a defense in federal tax court, relative to the amount of additional tax payments offered under a settlement agreement, makes it highly likely that settlement agreements will be accepted. This in turn translates into a very high 'return on investment' for the IRS and state tax agencies, since they usually don't actually need to prepare or litigate a detailed 'case' and can simply 'pocket' the additional tax revenues resulting from the settlement payment.
    Last edited by Melonie; 08-15-2013 at 11:09 PM.

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