Don't Mess with the IRS

Steve Raybine:

Blog #40:

"Don't Mess with the IRS"

The following is a letter I wrote to the American Federation of Musicians (AFof M), Local 70-558 in 2007 regarding my tax audit. The letter was published in the Musicians Local 70-558 newsletter.

Members of the American Federation of Musicians (AFof M), Local 70-558; now that we are in the final phase of tax season 2006, let me share a brief story with you. In late November 2006, I received an official letter (duplicate letter to my wife) from the IRS indicating that I was going to be audited. Apparently, the numerous payments I made and legally declared on my Miscellaneous Income tax forms for 2004 and 2005 to musicians; a variety of promoters; a CD duplication business; recording studios and engineers; graphic artist; etc., while making and promoting my CD, Bad Kat Karma, was the proverbial "red flag" that propelled me into a tax audit--one of the results of being self-employed and in business for yourself.

The next 3 ½ months of my life were "consumed" with finding and substantiating these 1099 payments; depreciation on instruments and/or music-related items (they went back 7 years, my friends); and my teaching and performing income and CD sales versus all of my personal and business tax declarations for 2005 (the most expensive year involving my CD, Bad Kat Karma). Here's the bottom line: this is very serious stuff, everyone! If and when the IRS decides to audit you, all I can say is, I sincerely hope for your sake that you've kept extraordinarily "ACCURATE" records, because you will have to verify and justify every parameter of personal income and tax declarations you've made in exacting detail. If you haven't, trust me, you will deeply regret your imprecise records.

I was fortunate that after this lengthy tax odyssey and my exhausting preparation for all the information requested from the IRS, I am due a very small refund. Although we have been told throughout our lives that music is an "art form," which I believe it is, it still is and will remain a very serious business and I recommend that you treat it as such. Don't ever forget these words: "Don't Mess with the IRS!"

Copyright 2007 Steve Raybine

All Rights Reserved

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