| strange tax audit ...need info
What is the name of your state?
My husband and I live in North Carolina.
We were sent a letter in March congratulating us because the IRS had chosen us for a random survey/audit. The IRS agent set a date to come to our home and review our taxes for the year 2001. She went over all of our returns and things were in order except for some receipts missing from a small home business. The receipts amounted to about $500 dollars The IRS agent said she would be willing to do a third party verification of my expenses. If she verified them the expenses would have checked out. This week we received a letter and form from the IRS agent. No mention of the home business expenses were mentioned in the letter. However there was a form numbered 4564 requesting information on a medical legal settlement I received that year. The agent wanted more information on the medical settlement. She also wanted to know who else knew about the settlement. There was also an additional form numbered 4822. It's called a "statement of annual estimated personal and family expenses". the form wants a breakdown of every penny spent that year even though these things have no relation to any tax deductions we took. Can someone please explain whats going on? What are they looking for? Is it legal to ask us how much our haircuts and clothing cost if we did not claim deductions on these items? Do we need a lawyer and does this have to do with a medical settlement that was invested and not taxable. Please HELP!!!!! | 
06-14-2003, 09:13 AM
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