April 8, 2019--The Art of the Audit

It was about ten years ago when Rona and I were audited by the IRS. This was not my ideal way to spend a morning in lower Manhattan. I would have much preferred to be there in search of the best dim sum lunch in Chinatown.

While waiting to meet with the auditor, as is my wont in stressful situations, I anxiously ran down all the scenarios my feverous brain could conger from a slap on the wrist with the admonition not to in the future over-deduct business expenses (we had a house we were renting) to being led out of the office in handcuffs to the Tombs, a prison for the accused awaiting trial, which was in the neighborhood but did not serve to felons wonton soup nor shrimp with lobster sauce.

At issue, I knew, was a major donation of paintings we had gifted to the University of Virginia's Art Museum. Nearly 40 works that my ex-wife and I had collected and which subsequent wife, Rona, understandably wanted off our walls and out of sight. 

Rona on her own had appeared at the initial audit and I joined her at the followup meeting as the auditor had a number of questions, including about how much the appraiser had determined the paintings to be worth and thus how much we could claim as a charitable deduction.

He had said, "Paintings are like cars. You buy one for $20,000 dollars (This was some years ago) and when you drive it out of the showroom as soon as it hits the street it immediately depreciates by at least $5,000."

Rona had said, "This doesn't make sense for art works. You mean if I buy a Picasso for $3.0 million [she was speaking theoretically] when you take it home from the gallery it depreciates and is worth only $2.0 million?"

For this he didn't have a good answer and so it was decided that she and I should come back to make an appeal to the IRS's art expert.

The art specialist saw the logic of Rona's argument and let us off the hook. 

After he left we remained with the initial auditor.

I noticed him looking at me more intently than seemed appropriate. Was he trying to peer deep within me to ferret out any other things I had lied about on our return? I tried to anticipate what I might have to be prepared to confess.

"I know you from somewhere," he said.

That calmed me. "Maybe we went to the same college or summer camp." 

"I don't think so," he said, "I never went to camp."

"Neither did I," I said, "I was only trying to . . ."

"Let me take a look at you." He got up out of his chair to get closer to me and adjusted the gooseneck desk lamp to shine more light directly on my face, which made me think this might be the beginning of the third degree.

"Where did you go to high school?"

"Brooklyn Tech. Why?"

"I went there too. In the late 50s."

"That could be it," I said, "Nice to meet you Mister . . .?"

"Brown. Stan Brown. I was on the math team."

"Me too," I said. "That must explain it. Nice to see you again. We have to go." I began to get up.

"What's your rush?" he asked.

"We have another meeting to get to," I said.

"Not really," Rona said. She is a truth teller. "Only to go for lunch."

Under my breath I muttered, "Unless we have to go to the Tombs."

"What's that?" he asked. I didn't respond. "Look," he said, "You can avoid audits if you bring your questions to us when you're working on your returns. Including about charitable deductions. In fact, as a Tech alum, you can call me with any questions you have. Here's my card with my private number."

"I have a question," I said. "Not about my returns for next year but about these audits."

"Sure," he said.

"Why go after small fry like us when in New York City there are so many rich people who I assume routinely cheat on their taxes? From people like us you might find a small underpayment that won't even cover the IRS's expenses? Including the cost of your time." Smiling, not wanting to make trouble for us, I added, "I of course don't mean this personally."

He waved me off. "Frankly, we don't have the capacity to go after the wealthy who have more and better lawyers than we do. So we go  after people like you and your wife. We concentrate on people with less income who can't afford fancy lawyers. Don't quote me of course."

"This is very sad," I said. "So unfair."

He shrugged. "Take Donald Trump, for example. [He actually mentioned him] He is being audited as we speak. Not him in person, of course, he's got a team of lawyers here representing him."

"That's good to hear," I said, "I mean that he's being audited. I assume he's among the biggest crooks."

My classmate shrugged and smiled. "What do you think we'll find?" he asked then answered his own question. "Probably nothing. His people know all the angles. They used to work for the IRS where they spent a few years learning all our methods and tricks and then leave to make a killing representing people like Trump, helping him and their other clients figure out how to go right to the edge of what's allowed by doing things that are so subtle and hidden that there's no way we at the IRS, with our limited capacity, can ever corner him, can ever make him pay what he might actually owe."

"You guys must have a Trump team that examines his books 365 days a year."

"Hardly," he said, "We call him in--again I mean his lawyers--every year and spend a few weeks trying to fire shots across his bow. To limit what he tries to get away with. But for most of the time he carries on unfettered. He complains in the press that he's always being audited but that's totally untrue. You'd be surprised how little scrutiny he's under by the IRS. He basically does what he wants and gets away with it."

"You're depressing me," Rona said.

"I lost my appetite," I said, "No more dim sum for me."