March 3, 2021
A stitch in time saves Nine
Did you know, that in case of an IRS Audit where you are required to substantiate your Mileage records, you only have 30 days to gather all the information, create a Driving log, and present it to the IRS? Many of our clients contacted us panicking because they have received a 30-Day IRS Audit Letter stating that they have to reconstruct 1 or 2 years’ worth of Driving logs within that 30-day period. If you would like to avoid this frantic state, think ahead and be prepared. Always.
Know your Taxes
There are certain items of a Driving log that are extremely hard to recall from memory. For instance, your Driving log must include the total Mileage you drove in the Tax Year; The First Odometer or the Last Odometer reading of the year; The Dates of your Business trips; The Address of the Business Partner you’ve visited; And the Purpose of your Trips. Think ahead when it comes to your taxes, recalling from memory is not reliable. Don’t wait for an Audit Letter, keep ongoing Driving logs.
Bad luck comes in Threes
In the event of a fairly common ‘Correspondence Audit’, you will be asked by the IRS to mail in additional documentation. They require several documents (Checks, Invoices, Contracts, Bank statements, etc.) that you need to recover in a short period of time. Then imagine having to go through a so-called Taxpayer Compliance Measurement Program (TCMP) Audit. The IRS randomly selects up to 50,000 returns, where they inspect every item and every line of the chosen tax returns and all the information must be substantiated by the correct documentation. Therefore you have to provide documentation for all of your claimed deductions and not just a selected one or two items (for example not just a Driving log for mileage).
Don’t shoot the Messenger
According to the IRS, you have to keep “an Account book, Diary, Log, Trip sheets, or similar record”. When we emphasize the importance of keeping ongoing Driving logs we speak from experience. We do this because we know it is much harder to substantiate documentation when being audited rather than keeping Ongoing Driving logs. It’s important that the average taxpayer knows the importance of keeping an accurate Driving log so they don’t end up paying large fines in the end.
Don’t leave it to the last minute
“I’ll simply make my Driving log when I have more time.” Does that sound familiar? A couple of months pass, they then turn into a year, and then the Tax season arrives you have still neglected to create your Driving log. At this point your rushing to recreate Driving logs under a Time crunch, and you are thinking “Next year, I’ll do it ongoing.” And that’s how it goes year after year until the IRS comes knocking.
Get Familiar With MileageWise
By using MileageWise to create your ongoing or retrospective Driving logs you will familiarize yourself with the requirements needed. With each Driving log created, you gain more experience and the task of creating Driving logs will become easier and easier. You will realize it is not a chore that needs to be postponed. You can trust that our system will work with you as a tool to help you create your Driving log faster and efficiently.
Knowing you have an accurate Driving log created for your taxes will give you a piece of mind and will help you relax and sleep easier. Do you really want to wake up in the middle of the night and think, “Oh shoot! I really need to make a Driving log. What if I get audited?”
Take Advantage of our 30-Day Free Trial, Try ALL of our Unique Features! You will see for Yourself that by creating IRS-Proof Driving logs in 7 mins/month you will save yourself from the consequences of Inaccurate Driving Logs, MileageWise becomes the Best Deal for your Dollar on the Driving Log Market.
Getting started is Easy – just click one of the buttons!
Did you like this article?
Similar blog posts
- Case Study #4: Company mistakes in 2021 - June 4, 2020
- Are you having trouble retrospectively reconstructing your mileage logs? - September 18, 2019
- A list of your Data that the IRS has Access To - February 9, 2021
- Errors in your mileage logs discovered when changing accountants - a risky situation - September 2, 2019
- Company Mileage Reimbursement - Explained - April 7, 2021