A New York court refused to overturn an auditor’s ruling that a Brooklyn tax attorney could not write off the $120,000 he spent on prostitutes and pornography. The man claimed that his purchases qualified as medical expenses because of the “positive health effects of sex therapy.”
An IRS auditor once refused to allow a woman to deduct about $100,000 in medical expenses resulting from an auto accident that left her daughter in a coma. The amount, claimed the auditor, was “just too much.”
An auditor once disallowed a particular deduction on a taxpayer’s business equipment, saying it conflicted with another deduction he had already claimed. After some run-around, the issue was resolved in the taxpayer’s favor; he later learned that the agent was a former receptionist at the IRS office and had only recently been trained to conduct audits.
In 2009, the Seattle Times reported that a single mother of two was audited because the IRS didn’t think it was possible for her to support her family in an expensive city like Seattle on her meager income alone. They believed she was hiding unreported income and slapped her with a $16,000 tax bill. It turned out that her yearly salary of around $20,000 was enough to take care of her kids because she lived in a home owned by her parents and didn’t drive a car – the IRS had incorrectly interpreted their own law.