The Internal Revenue Service conducts audits of taxpayers’ finances for a variety reasons. A taxpayer may be randomly selected for an audit through a statistical formula. The IRS also conducts audits of potential participants in abusive tax avoidance transactions, and the IRS often performs audits of many larger corporations. In addition, an audit may be conducted because there are discrepancies between tax returns and documents such as Forms W-2 or Form 1099 interest statements from banks. There are thousands of audits conducted each year, and each audit is different.
Does the IRS conduct politically motivated audits?
One movie producer in particular, however, might argue that the IRS conducts audits for another reason: political motivation. Recently, Mr. Logan Clements, the producer of an anti-Obamacare movie, received an audit notice from the IRS. Mr. Clements, who produced “Sick and Sicker: ObamaCare Canadian Style,” has never been audited before by the IRS. Mr. Clements believes that the IRS decided to audit him for political reasons.
Needless to say, Mr. Clements’s movie is critical of Obamacare. The movie argues that Obamacare will lead to a socialized healthcare system, similar to the one in Canada. In an online video post announcing his IRS audit, Mr. Clements stated that IRS has requested a “ridiculously long list” of documents, which includes “a detailed description of all transactions related to all prior year returns and supporting documentation.”
Mr. Clements believes the IRS audit is nothing but a fishing expedition and possibly is meant to delay people seeing the moving before the November election. Unfortunately, if that was the IRS’ plan, it backfired because Mr. Clements will be releasing the movie online through a “statewide open screening license.”
Mr. Clements believes his audit represents a pattern of politically motivated IRS audits. Breitbart News-the conservative news website-was also recently selected by the IRS for an audit. The audit of Breitbart News comes on the heels of “complaints [the IRS] targeted conservative groups for extra scrutiny as they sought nonprofit status,” a practice the IRS stopped last year.
While the IRS cited federal privacy laws in refusing to comment on the Breitbart News audit, the IRS stated that “audits are based on the information related to tax returns and the underlying tax law — nothing else.”
Contact a California Tax Attorney
If you find yourself in the midst of an IRS audit or have any questions regarding this process, Janathan L. Allen, APC’s experienced tax attorneys can help guide you through this process. We offer legal advice and representation to help our clients with issues and problems that may arise during a tax audit. We provide our clients with careful tax analysis, and we help our clients determine what documents should be given to the IRS in order to avoid unnecessary disclosures. We also assist our clients during appeals of audit determinations.
We have several offices located throughout Southern California. Contact our office today for a free case consultation to discuss your audit and any other tax-related issues.
