possible IRS audit - may have underpaid

[jiggy78]

What is the name of your state (only U.S. law)? Federal

I had to call the IRS yesterday on an unrelated matter and was advised by the representative that my 2008 1040 tax return had been "selected for possible audit".

I looked at my return and supporting documents, and everything appears to be correct and reasonable except that I claimed $500 in charitable gifts for a hair donation I made to locks of love. (which is a legit non-profit). The fair market value of the hair was easily over $1,000 (I have nice hair) but after doing further research it appears that one cannot take a tax deduction for donated body parts. This error was not intentional but nevertheless it appears I took an incorrect deduction. The additional tax due would be about $150.

So my questions are as follows:

1. Assuming everything else on the return is correct and reasonable (which I believe it is), will this be enough to trigger an audit? Will they just send over a notice of additional tax due?

2. If my return is selected for audit, do they just come to look at that one year or multiple years? I am asking because I lost the supporting documents for my 2009 return in a move and made a substantial donation ($5,000) to the American Cancer Society in memory of a loved one. (They could probably send me a receipt for that if I needed it).

Thanks.

 

[jiggy78]

I just though of something. Can I even be audited for this? The return was filed on or about Feb 1, 2009. Doesn't the IRS only have 3 years to audit you from the date you filed the return? That would have run out early this year.

 

[tranquility]

Supposing is of no value. Wait for written notices. The statute would start running on the due date of the return and not when it was filed. But, that is extended for gross misstatement. Another issue to extend is if you used the information from that year for another, like in basis determination or creation of an NOL.