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Thread: Im being Audited, could REALLY use some Advice!

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    Veteran Member hf487's Avatar
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    Default Im being Audited, could REALLY use some Advice!

    Ok so im being audited for 2010-2012... I got a letter a few months back that scared me half to death but i had a couple of ppl tell me not to worry that it'll be ok and that they had been through it. I want to get this behind me because i make awesome money camming, but i still feel like a broke ass since i owe IRS there claiming anywhere from $10,000-$18,000 seeing as i don't have receipts for alot of my beauty purchases and shopping receipts for work. I was never "taught" or told to do my taxes, and that is probably because i never took a "vanilla" job serious and started dancing at 18. I feel really silly for getting myself into this mess but i just have no clue when it comes to taxes, although in the last couple of months i have learned alot! The lady auditing me has already told me she has never dealt with anyone in my industry and is telling me that non of my beauty purchases, hair nails, makeup or outfits can be written off. I know that isn't true but it also doesn't help that i don't have receipts for the years they are auditing me on. My question is, have any of you gone through this, if so what happened? And Also how do i go about hiring a tax attorney who isn't just going to take my money and not do anything for me. I have until September 30th so i need to get all of my receipts together and hire someone asap, any advice would be great, Thank you all, you have some of the best advice, and your all so smart! I just want to put this all behind me so i can save and work on my credit but right now this is my number one priority to handle......
    They said "Hey there, girl, tell me what do ya do?"
    She says "nothing, but I'm damn sure it's more than you"

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    Default Re: Im being Audited, could REALLY use some Advice!

    You need a tax professional. Ms Liz is one you could ask a few questions then decide if she can help you. Did you make the purchases for beauty items on a credit card? There would be a record of the company, if not a detailed item listing... I would make the argument that your purchases were above and beyond the ordinary, particularily if you can show that you didn't leave your house and just cammed alot of days. Another reason to have a pro between you is the same as having a lawyer (and only them) talking to the IRS so you don't reveal anything more than you need to. When they ask you, you're on the spot fumbling for an answer, when they ask the pro, the answer is 'I'll research that and get back to you'...Good luck!
    Originally Posted by
    I don't know what it is about me that says "wife me up." Everyone wants to choke me or date me. Or both. This job is weird.


    Originally Posted by Nocturnelle
    ... Kittens are assholes but they're just so darn cute.

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    Featured Member Aurora14's Avatar
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    Default Re: Im being Audited, could REALLY use some Advice!

    These 2 threads are in the first couple of pages when you search taxes on the site. Look through them. The info gets a lot more specifiv than what I have written below.
    https://www.stripperweb.com/forum/sh...ight=tax+write
    https://www.stripperweb.com/forum/sh...ighlight=taxes

    I've been dancing and/or camming for 6 years. 1) You have to have to start keeping receipts. They are important for you situation in particular. 2) Do the housewife test. Is what you are buying/ having done something any ordinary woman goes out to get on a normal basis? Can't claim it. A web model can deduct computer equipment, possibly use of your house (if you have a room that is for nothing other than camming), clothing has to be listed as a costume on receipts, and makeup has to be listed as theatrical makeup. That cute bra and panties from Victoria's Secret, manicure, and MAC collection, not deductable. The only time I claim clothing that isn't listed as a costume is if I go to a store with a dancer discount (usually porn store) and that is because the "Dancer Discount" is applied directly to anything that doesn't qualify for that store's housewife test and it says that it is a Dancer Discount right on the receipt.

    IMO you're screwed and owe it. I don't know where you are, but you should go to a CPA, talk to them about having them do your taxes for you for now on and ask for their opinion on a good local attorney. Let a professional do the worrying for you. It will be worth every penny to not get audited again.

    Good luck

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    Banned Melonie's Avatar
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    Default Re: Im being Audited, could REALLY use some Advice!

    As discussed in lots of other threads, the IRS follows a 'housewife test' doctrine regarding the deductibility of particular goods and services as business expense items. Put another way, the 'housewife test' states that anything which a housewife would spend money on, with no business reason for doing so, must be primarily of 'personal' benefit thus not deductible. As such, even if you did have 100% receipts for items like dep't store makeup, lingerie, sex toys, hair / nail / tanning salons, etc., your auditor is going to deny these deductions because they fail the 'housewife test'. However, certain items that are NOT typically purchased by housewives ... like 6" heels, theatrical supply store makeup, specialty shop dance outfits etc. ... probably would remain legitimate business expense tax deductions since their ONLY use is business related ( providing of course you have the receipts ). But if you bought the stuff at WalMart, Target, Penneys etc., it probably 'ain't happenin'.

    Now the IRS does have a conflicting doctrine that expenses which are 'ordinary and necessary' for the operation of a business are legitimately deductible. But your particular auditor isn't buying into that argument. So to pursue the point, and potentially have your challenged deductions allowed, you'll need both a solid 'paper trail' of receipts to prove your expenditures PLUS an attorney to represent you in 'tax court'. Even with 100% receipts and a great tax attorney, the results would be doubtful. Without receipts, the results are extremely doubtful.

    Also, officially challenging your auditor's position will immediately put you in an 'adversarial' position vs the IRS. This may prompt them to seize $18,000 worth of bank accounts, car titles, and other assets as a 'guarantee' that the IRS will get their money if/when you lose in tax court. This may also prompt the IRS to dig even deeper into your finances i.e. looking into any 'payments' you have received outside of webcam host payments covered by 1099s ( i.e. gift cards, e-wallet transfers, cash income from strip clubs etc.), which could potentially lead to IRS claims of 'unreported' income ( which you can't prove you DIDN'T receive ) thus an even higher bill for tax deficiencies. Also, this is a much larger problems for camgirls than for dancers, since dancers often get paid in cash while camgirls depend on having a bank deposit webcam host checks or transfers ( which the IRS may decide to seize directly out of your bank account before you ever get your hands on the money - until your tax court case is resolved one way or another ).

    IMHO if you're 'ONLY' talking about $18,000 I would seriously consider simply making the IRS a 'settlement' offer ... i.e. voluntarily offering to pay $9,000 to save both yourself and the IRS the additional costs of going to 'tax court'. Since making a 'settlement' offer ( in lieu of going to tax court ) is going to cost you some money, the real question you have to ask yourself is 'how exposed am I if the IRS takes a fine toothed comb to my personal finances' ? If the IRS requests duplicate statements etc. and starts adding up all of your bank deposits, utility payments, rent payments, car payments, tuition payments, credit card payments, normal costs of living in your zip code area etc., did you report enough income on your 2010-2012 tax returns to 'cover' the total amounts of all the money you spent with that reported income ?

    If there is any doubt whatsoever in this regard, you potentially stand to lose far more than $18,000 if you choose to go to tax court thus triggering an IRS fine tooth comb audit of past year's taxes which estimates that you under-reported your actual income by $10-20k per year for the past several years. Also, if the IRS does wind up looking 'under the hood', and in the process finds that your total spending has regularly exceeded your total reported after-tax income, they can then take a position that you are a 'tax cheat'. This will virtually guarantee that your future year tax returns will also be looked at with an IRS fine tooth comb. So voluntarily agreeing to pay a 'settlement' may not only reduce your tax bill for disallowed deductions, but also head off potential additional tax bills for unreported income, and also keep you from being pushed to the top of the IRS audit list for each of the next 3 years ( or whatever ).

    I would add as a side note that the ACA increased IRS funding for the express purpose of increasing IRS attention toward ( among others ) self-employed persons who do not receive employer sponsored health insurance. And the IRS already had a FICA list of 'high risk' businesses that will receive increased attention ... which includes 'adult' businesses of any kind. Thus it is to be expected that dancers and camgirls are going to be receiving more IRS attention this year.
    Last edited by Melonie; 08-05-2014 at 05:36 PM.

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    Default Re: Im being Audited, could REALLY use some Advice!

    Thank all of u so much, i've read over what u've said and i appreciate u taking the time to give me some much needed advice, i've got a long day on cam, i need the money now more than ever to pay everything off but i'll b responding tomorrow morning.
    Ive already had my wages garnished so i guess i got that out of the way ; / they did that about a year ago and ever since ive been making monthly payments to the irs to get them to stop taking from my paychecks. Im always on time so that's not an issue, as of yet. I just need to get this sorted out asap, tomorrow morning im looking for local tax attorneys and getting myself organized, im not trying to get off of oweing them, i know i do but im hoping it won't be that much... im even willing to do 10k. The woman auditing me said 18K is worst case scenario but hope for the best, prepare for the worst i guess.... I just want to get straight with them and put it all behind me. i know i was careless in the past and just didn't file properly or AT ALL, but only because i didnt know what the hell i was doing. Im learning the hard way now. Thanks again for ur advice will write more later, gotta get my booty online ....
    They said "Hey there, girl, tell me what do ya do?"
    She says "nothing, but I'm damn sure it's more than you"

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    Default Re: Im being Audited, could REALLY use some Advice!

    ^^^ best of luck regarding the audit. If it's any consolation, don't feel like the 'lone ranger'. As stated earlier, camgirls and dancers now fall into multiple categories which the IRS considers to be 'high risk' ... thus the odds of being audited are significantly higher than for 'employees' filing tax returns showing similar amounts of income.

    Also, the point you allude to is well taken. Indeed, the general US education system provides little if any preparation for filing taxes ... and next to no prep in regard to filing taxes as a self-employed 'business operator' i.e. independent contractor camgirls and dancers. And between the significantly high ( 20-30% ) effective tax rates, plus the need for self-withholding and self-filing of quarterly estimated tax payments, it's all too easy for a 'new' dancer or camgirl to find herself in a situation of owing thousands of dollars, or more likely owing tens of thousands of dollars, to the IRS and her state tax agency. As you have discovered the hard way, this is very difficult to 'dig out from under' when ~20-30% of current income must be applied to current tax liabilities, when another ~20-30% of current income must be applied to past tax liabilities, penalties, interest charges, etc. And indeed the IRS can get 'ruthless' in this regard ... garnishing straight job paychecks, freezing bank account balances, placing liens on assets etc. to assure that they will receive the money they are owed by one means or another.

    The moral of the story, of course, is that 'new' camgirls and dancers need to start self-withholding part of their money for quarterly estimated tax filings / payments as soon as they start receiving camming or dancing income. This is the only way to avoid the major 'surprise' of an audit, or annual tax return filing a year down the road, driving home the fact that they must immediately come up with thousands, or tens of thousands, to pay their tax bill.

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    Default Re: Im being Audited, could REALLY use some Advice!

    Yes, good point, you are clearly 'on their radar now', likely coming up every 30 days on a revenue agents 'to-do checklist', so be sure to comply exactly with what is required, payments or providing information. Also keep in mind that the IRS agent wants to 'clear you' from her to-do list also, so whatever terms or extension, payment plan is agreed to, be sure you stick to it. (... and don't agree to a payment plan if you don't think you can handle it, it will just bite you in the butt 30/60/90 days from now...)

    Yes, receipts and documentation. My personal policy is to get a receipt for Everything, put it in the folder and let my tax professional decide if it can be applied. This also applies to logging any work related mileage, i.e. if you go to the post office, ship items, etc. Home based businesses / home offices are already 'red flagged', adding the 'sex business category' creates more scrutiny. The good news is that once you get through this, you will easily be able to duplicate it for the next years and only rely on the tax professional for a review and any tax law or situational changes.

    Good luck!

    Quote Originally Posted by hf487 View Post
    <snip> ever since ive been making monthly payments to the irs to get them to stop taking from my paychecks. Im always on time so that's not an issue, as of yet.... <snip>
    Originally Posted by
    I don't know what it is about me that says "wife me up." Everyone wants to choke me or date me. Or both. This job is weird.


    Originally Posted by Nocturnelle
    ... Kittens are assholes but they're just so darn cute.

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