Who to Audit? Mickey Glantz or WorldCom?

Written by M. Glantz. Posted in All Fragilecologies, Capacity Building

Published on October 21, 2009 with No Comments

IN LIGHT OF THE CURRENT FINANCIAL CRISIS AND ONGOING CORRUPTION IN FINANCIAL CIRCLES, I THOUGHT IT MIGHT BE INTERESTING TO REVISIT AN EDITORIAL I WROTE SOME YEARS AGO WHEN I WAS GOING TO BE AUDITED AND THE NOW DEFUNCT WORLDCOM WAS NOT. PERHAPS, INSTEAD OF AUDITING MICKEY GLANTZ IN 2002, THEY SHOULD HAVE KEPT THEIR EYES ON BERNIE MADOFF!!!

About ten years ago, I got a dreaded letter in the mail. It was from the Internal Revenue Service. They wanted to audit a tax return of a few years earlier. Why they picked me I will never know. The auditor said that it was some sort of random check. It was a command performance, that I must be there when they tell me to show up. In fact, my job requires that I travel a lot and apparently the IRS, at least then, allowed only one postponement. If I did not comply with a second date for the audit, I was told I would be delinquent and subject to whatever the IRS was questioning.

After several sleepless nights, I asked my accountant to re-check my tax return and to come with me to the audit, which was not in Boulder where I live but near Denver. I drove the accountant to the audit. We sat in a waiting area and had the “opportunity” to listen to a taxpayer being raked over the coals by an auditor in one of the Dilbert-like cubicles that serves as their offices. “Mr. Glantz,” I heard the receptionist say, “the auditor will see you now.” Showtime!

I recall walking into the office and spotting on the wall a certificate of appreciation to the auditor signed by President Reagan. The auditor appeared to be less than 30 years old. On his desk was a copy of a hunting magazine. There I was, on the opposite side of the desk, a tree-hugging liberal and supporter of animal rights. I had a feeling I was in for a bad time. I had brought some articles in which I had been quoted or that I had written for conservative magazines in order to show that I was “used” by the two ends of the political spectrum. He seemed somewhat impressed.

I presented my itemized lists of deductible items — books, travel, unreimbursed work expenses, and so on. They were hand-written and recorded on yellow legal paper. Then the fun began. “Why did you count item X as a work expense? Where did you stay when you were in such and such a foreign city?” Most of the conversation now is nothing but a blur. I do, however, recall a couple of questions that have stuck with me. In fact, I refer to them at parties if ever the IRS becomes a topic of conversation.

Running his finger down the hand-written lists, he came across an item marked “book.” He asked, “you have a book listed here on March 3 (three years earlier), what was the name of the book and its author?” I said that if it was on my itemized list it was work-related, probably an environment or climate book. He continued down the column and said “Here is a book for $22.43. What was the book, and who was its author?” I gave the same answer as before.

After about two hours of this Q&A, he summed up the meeting noting that he had found some discrepancies in favor of the IRS and that he had found even bigger errors in my favor. He suggested we forget them, and just as I was about to agree (just to get out of there), the accountant said we would file for the $167 dollars owed to me.

Now, get the picture: I was about to get back money from the IRS following an audit. I was told that only a few percent of audits get anything back and that over 80% of those audited have to pay something additional. I had survived my first and only audit … so far.

Today we have two major scandals related to “cooking the accounts.” Enron did it one way and WorldCom did it another. The former used a clever way to hide their lie, whereas the latter apparently manipulated their numbers so as to look profitable. But the methods of accounting they used were obviously phony and (it has been said) would have been spotted in the first few weeks of Accounting 101 at any college.

The point I want to make is that the IRS scrutinized me at the $8- and $22-dollar level, while they were unable to detect an obvious misplacement of $3.6 billion.

There is hope and solution in the offing, however. The new young auditors, like the one that scrutinized every meager amount on my list of deductions a decade ago, should be given the task of reviewing these multi-billion dollar corporations, and the IRS accountants in charge of monitoring and scrutinizing the WorldComs and Tycos and Xeroxes of today should be sent to the minor league to audit the hand-written lists of deductions of everyday, hard-working Americans. Maybe, this way, those hard-working laborers would finally get a break on their taxes.


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