My First Audit
WHY YOU SHOULD CARE
Because going broke is no joke.
By Eugene S. Robinson
It had been an unusually good year. For me, I mean. It was 1989, and everything was popping.
And by “everything,” I mean the store I had opened, the only music, video, music apparel, book, tattoo and gun store in, well, maybe existence, was making money. I was knocking back TV show and film work by way of Midnight Caller, The King of Love and the wretched but now-renowned Bill Cosby confusion Leonard Part 6, for which residual checks were rolling in as they might for one of the worst films of all time.
On top of that, I had an editorial day gig at the Electric Power Research Institute. By my loose count, I was floating at least five different sources of income, had bought my first house to minimize the tax bite and had roommates to defray mortgage costs. World beating, by my 27-year-old standards.
Then: a letter.
Pro forma but no less chilling, the letter informed me that I was being audited. By the IRS. I called my accountant. My accountant didn’t call me back. I wrote him a letter. He didn’t write me back. I called again. To be more specific, I called the guy who had asked me, “Could you say you spent $5,000 a year on wardrobe?” He didn’t call back.
“Since you’re either in business to make money and not lose money or you’re in business and losing money and maybe that’s a sign?”
Eight calls in, I finally got him. “Look,” he said. “You don’t need me. It’ll cost you some money if I go in and, well, I think you can handle it on your own. I mean, you’ll be better off on your own. But I’ll be glad to help if you need me. Just get ahold of me. Or something.”
In that pre-internet era, I started asking people what to do. “My friend Ralph got audited,” a poverty-crusading community activist I knew recounted. “He had them show up so they could see how poor he was. He answered the door in a dirty bathrobe, coughed during the whole interview, ate crackers, the whole bit.”
Did it work?
“Oh, no. They mugged him for everything he had.”
“Look, never let them come to you,” an accountant friend of mine advised. “They send the sharp ones out in the field,” she said. “The not-so-sharp ones? They stay in the office.”
I made an appointment to go in. Collected receipts, invoices, got all the ducks in a row. The building in San Jose, California, was a very typical municipal building: nondescript. But with a major difference: no humans. And lots of Plexiglas and a phone. Given how overwrought the tax conversation is here in America, this is no surprise at all. No need to have angry Americans exercising their Second Amendment rights in a fit of high dudgeon.
After not too long a wait, I was sitting across from an IRS agent.
“Do you know why you’re here?” he asked. All bland collegiality.
Any temptation to smart-mouth your way through this? Forget it. “You’re going to audit my finances.”
“Mostly because, while you have multiple and seemingly successful sources of income, you also seem to have lots of business losses to offset this income,” he said.
“You know, I never pay my own taxes. Wait, wait, wait … I mean my accountant does my taxes for me. I just write checks.”
Silence. “Well, it looks like you’re trying to avoid paying taxes. Since you’re either in business to make money and not lose money or you’re in business and losing money and maybe that’s a sign?”
“Well. Maybe we should go through it.” And I pulled out itemized hard copies, among them pay stubs from Columbia Pictures, Sony, ABC and a passel of other studios.
The agent took particular note of these and grabbed a fistful of them, then said to me, “What do you do? It says here ‘editor,’ but …”
“Oh. I’m doing film work on the side.” He had me walk through the silver screen stuff. Long, slow whistle. And then everything just stopped. I could hear his breathing. My breath was being held.
Then this: “Man. I hate this job.”
Without missing a beat, I said, “You should try acting or movie stuff. It’s easy. I mean, compared to sitting” — I waved my hand across the beige of the office — “here.”
And then we were off to the races. His dreams. His plans. His love of music and the stage. Him “ending up” at the agency because he was good with numbers. Time flew and, before we knew it, 90 minutes had passed.
“Oh. Hmm. Look. We’ve been here so long I’m going to have to find something. How does $60 sound?”
I thought he was saying he’d somehow find that I had underpaid by $60, but I wasn’t sure and I also wasn’t taking any chances. I had made six figures off some of the film work. So $60? Some kind of crazy luck of the Irish.
We shook hands and made plans to hang out at some unnamed point in the future. He never called, and because they typically audit in clusters, I was called back the next year and the year after that. But I never saw him again. While I hope this means he followed his dreams, I also hope to never have to see the inside of that office again to figure that out. So until then? Let’s just assume the best. And save those receipts.