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We had a certain neighboring state auditor in here all last week and they may be coming back.

We charge our customers an ongoing fee for support. This state does not view this as a service but more of a tangible product. Do not ask me how they determined that. I spent a great deal of time trying to explain the difference between an operating and capital lease and convince them we are a business partner and never take possession of hardware our customer's lease.

With that arbitrary decision we will have to go back to all our customers and have them pay tax on this tangible product charge for 4 years. The state also wants to charge us penalties and interest.

I can imagine we will have to have a tax attorney involved.

Looks like you dogded a bullet, GL, congratulations!
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I know the feeling gregorylee. Several years ago when I filed, I attached the form for moving expenses. The expenses totalled a little over 3 thousand dollars. I got my refund and thought all was well. About two years later I get a letter from the IRS telling me that I needed to provide more justification for the 133 thousand dollars I claimed for moving expenses. Of course my first thought was....WTF are you talking about?

I pulled out my tax return for that year and looked at the form I filed my moving expenses on to see where they got their figures. As soon as I looked at the form it was apparent what they had done. I put a $ in front of the 3 and whoever was reading my return was not paying attention and read the $ as a 13. Even though it was VERY clear that it was a $ and not 13. But as many people know, you are guilty until you prove yourself innocent with the IRS.

So I made a another copy of the moving expense form and wrote a note with it explaining that if they looked at the form again they would see that it wasn't $133,xxx worth of moving expenses but 3 thousand with a $ in front of it. Several weeks later I get this pre printed post card from the IRS saying that after further review of my case it was being dismissed.

I'd like to meet the individual who took care of my return that year.
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gregorylee said:
jeez skins, the morons they have working for the government :biggrin:

(that is where I work)

I just don't understand mistaking a $ for a "13".

and then not catching it before they sent it out.
I work for the same government too.....just a different branch. As for mistaking the $ for a 13, I think it was most likely someone paying little or no attention to what they were supposed to be doing and a lack of quality control.
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