RUSH: This is Becky in Salem, Oregon. Great to have you here, Becky. Hi.
CALLER: Hi, Rush. It’s a pleasure to speak to you.
RUSH: Thank you. I can imagine.
RUSH: Are these Schedule C deductions?
CALLER: I don’t… Well, they just gave me a sheet and they checked off charitable giving, miscellaneous deductions.
RUSH: Ah, that’s schedule C.
CALLER: Yeah. I don’t know if it’s just because of our tax bracket or what, but it’s like (garbled).
RUSH: No, I think… No, no, no, no. Well, it could be. I don’t know what your income level is, but the IRS commissioner announced a renewed all-out effort on high-wealth people.
CALLER: (groans)
RUSH: We’re talking multiple millionaire people who have an intricate business organization that could be, they say, rife for hiding money from our beloved government. Now, does that describe you?
CALLER: Well, we’ve had to dissolve some of our investments into CRTs just to make sure that our investments are not being taken advantage of.
RUSH: Well, but you and your husband don’t own multiple businesses in Bahamas and Bermuda and all that, right?
CALLER: No, we’re not. (giggles) No.
RUSH: All right. So I think a computer probably just spit your return out, something in your return, deductions versus your gross and adjusted gross. A computer probably just spit it out and so you gotta deal with it. It’s not a full-fledged audit. It doesn’t sound like this is a harassment audit.
CALLER: But it just seemed like, okay, here right in the midst of taxes. Our poor accountant probably going to hate us. Even last year we received some letters.
RUSH: Is this the first time you’ve been audited mini- or full or otherwise?
CALLER: Yes, yes.
RUSH: Oh, well. (laughing)
CALLER: (laughing) Gonna get used to it?
RUSH: (laughing) Oh, have you got a lot to learn!
CALLER: We’re still young.
RUSH: Yes. Yeah. Well, this is not that big a deal compared to what they could do.
CALLER: Yeah.
RUSH: If all they’re asking you to do is justify your deductions further, like your receipts. You’ll have to provide them for every charitable donation you gotta provide them a letter from the charity acknowledging that you did make a donation. You can’t just say, ‘I gave leukemia-lymphoma a thousand dollars.’ If the computer spits your return out they’re gonna want to see the letter —
CALLER: Yeah.
RUSH: — from the Leukemia-Lymphoma Society. So if you made charitable donations go get all those people to send you a letter the year that you made donation and verifying the amount. If you got a bunch of meal, entertainment C deductions — business entertainment and so forth — just produce the receipts.
CALLER: I’m thankful my husband is very good about being on track with that, but one one of our family members told us, ‘Hey, listen, why don’t you also submit other deductions. I forgot these I didn’t put them on my return to balance out,’ if they don’t accept our other deductions, because I know either way they’re going to grab us up by our ankles and shake us out for some more money, but it’s just frustrating.
RUSH: Really? Yes!
CALLER: (giggling) I’m sorry. I’m just angry. Every time we get my husband’s paycheck, it’s like he works so hard, and every year it just seems like more and more is being taken. I know it’s normal, and I know I’m probably saying the same thing millions of other people are saying. But, like (sighs), it just seems like it’s never going to end. It’s just frustrating. (giggles) Sorry.
RUSH: It’s like what’s never going to end, taxes or the harassment?
CALLER: Just that the increase of taxes with this whole health care thing.
RUSH: You haven’t even seen anything. You ain’t, as they say, seen nothing yet.
CALLER: I know.
RUSH: I mean, starting next January, all the rates get bumped up.
CALLER: Yeah.
RUSH: Well, I’m hearing conflicting talk that the Bush tax cuts in the middle class aren’t going to be sunsetted.
CALLER: Well, that’s good.
RUSH: But if you’re in the 36% bracket, hello 39.6%.
CALLER: Mmmm.
RUSH: Then you add the state increases to that. A lot of people — the job creators, the entrepreneurs — are going to be facing a total income tax bite of over 50% when you factor in the states and Medicare, FICA, Social Security, and all of that. So it’s…
CALLER: (groans)
RUSH: No, everybody’s going to get socked. Everybody’s going to get socked. By design.
CALLER: (groans)
RUSH: Look, the whole point here is to prevent upward mobility. The whole point is to prevent people like you from acquiring wealth.
CALLER: (sighs) It’s just maddening. It’s just difficult to watch. (giggles)
RUSH: Tell me about it. Tell me about it. Look, I’ve been audited 12 years in a row by the state of New York.
CALLER: (giggles)
RUSH: When I moved outta there in 1997. I sent ’em three letters. ‘It’s been fun for eight years but I’m gone. I’m not filing returns ’cause I’m outta here,’ and three years went by, four years went by and fine. Then I got a note. ‘You haven’t filed returns since 1997.’ That was five years at the time. ‘We need to see every bit of tax information and your federal tax return. We want to know when you were in New York, what days you worked in New York, and so forth.’
CALLER: Wow.
RUSH: I had to prove it. It took two years. I had to prove it to them 14 different ways, every day of those five years.
CALLER: Yeah. It’s amazing what they ask you to do.
RUSH: You’re lucky. You just got a computer-generated note saying justify your Schedule C.
CALLER: Yeah. Okay, well, I’ll count myself lucky.
RUSH: Wait ’til you get a note demanding that you prove to them where you were 14 different ways in the tax year.
CALLER: (giggles) Ohhh.
RUSH: Wait ’til they say, ‘Which house do you really live in? Do you live in New York or Florida?’ ‘I live in Florida.’ ‘Well, we want to come see. We want to come see which of your houses is the more lived in.’
CALLER: Wow.
RUSH: They can do it. You’re guilty until proved innocent under tax law.
CALLER: Wow. Well, thank you, Rush, for your help. At least it calms me down somewhat.
RUSH: Aren’t you glad you called?
CALLER: (laughing) I was expecting you to give me some great insight into how to overcome this, but no.
RUSH: Well, now, wait a second.
CALLER: (giggling)
RUSH: Okay, wait, wait, wait. How to overcome it?
CALLER: I don’t know! Maybe just to go, ‘Okay. I hear you.’
RUSH: Whoa, this is interesting. what were you expecting? This is…
CALLER: Noooo. No. No. (giggling)
RUSH: No, no, no.
CALLER: (laughing)
RUSH: There’s nothing wrong here, Becky, there’s no wrong answer. I’m curious.
CALLER: (laughing)
RUSH: I have failed add host here —
CALLER: No, no, no. (laughing)
RUSH: — and I want to know what you were expecting, what kind of insight.
CALLER: Oh, just that you gave me words of encouragement as I look at this explanation-of-items sheet that I can just overcome the government by sticking it to them and maybe have some pithy things to say back. I don’t know. I love your show, and you just helped my husband and I just keep perspective on where things are at. So, no. You have not failed me as host.
RUSH: I was trying to give you some encouragement by saying —
CALLER: (giggling)
RUSH: — it sounds like a computer spat this thing out.
CALLER: Yeah.
RUSH: It doesn’t sound like you’ve been targeted for anything.
CALLER: Well, okay. Yes. So you haven’t failed me as a host.
RUSH: Yeah, but you have to deal with it.
CALLER: Yeah.
RUSH: I mean, you can’t sit there and ignore it.
CALLER: No, not at all. (giggles) Well, thank you, Rush. I’m sorry that I —
RUSH: Well, Geithner ignored it for a while, but then when he wanted to become secretary of the Treasury he had to pay the money back.
CALLER: Well, exactly! That’s what I’m frustrated about!
RUSH: Maybe you could say, ‘Go ahead, Becky and ignore it and when they come for you, say, ‘I don’t want to be secretary of Treasury so I’m not going to pay this,” and you might not owe anything after you go through the process here anyway. (laughing) I mean, there are all kinds of inspiring ideas I could give you. You said it’s a mini-audit and from what you’ve said, it sounds like it’s a traditional, computer-generated thing that happens randomly. It doesn’t sound like you’ve been targeted for any reason. You’ll know when that happens. You’ll know when you’ve been targeted. It’s no doubt about it.