Reply #32: But "illegal" is entirely in the eyes of the IRS, as we discovered when we were audited

[riderinthestorm]

As a horse business, we've been audited 3 times. The first time they tried to tell us we were not really in the "horse business" and were not "professional equestrians" legally able to deduct legitimate expenses to run our business. Could they quantify why we were not professionals? No. They didn't know enough about the business to know. The auditor just mandated that it was so and disqualified many of our expenses. We paid out thousands of dollars when the judgement came against us. We'd done our taxes ourselves, felt we thoroughly understood the process and what we needed to do (we have a relative whose a tax specialist who helped us in the early days with our returns). Boy did we get screwed because we didn't know that clout means everything in these cases.

Since then, we've hired a high end tax attorney to do our taxes (and represent us on the next two occasions we've been audited in the past 25 years). Same bills, same expenses, same business, same people involved in helping us run the business - essentially the same returns. But voila! With an (expensive and connected) tax attorney, we are NOW all legit.

We've been the same professional trainers, riders, boarding, sales and breeding operation that we ever were but NOW we are savvy enough (and with enough extra money) to hire real representation.

The IRS is a racket. I am convinced. I have the bills to prove it, the judgements to prove it, and the decades of fighting them to prove it. They go after the little to medium size guys because they know we do not have the means, stamina and wherewithal to fight them forever - they know we are going to cave. It's easier to go after those (theoretically) owing $85k than to go after those who owe millions and can hire the right attorneys to fight the IRS every step of the way.