As much as I hate paying taxes, I am generally on friendly terms with the IRS. Even though I help defend people who have civil and criminal tax problems, I really hold no ill will toward the IRS. Their employees have a job to do. They just enforce the law and process your forms and money.

But sometimes the IRS does silly things that make me shake my head. Take this letter written to my client: Our records show we received your original and amended tax returns on May 08, 2007 and Oct. 22, 2007, respectively. We're sorry but we can't find them, so we need your help to answer your inquiry. Please send us a newly signed copy of your amended tax return.

Translation: We know you sent us your tax returns. We even know on what dates we received them. But we can't find them. Send them again. I have a slight problem with this. If we taxpayers lose our documents and mess up in regard to taxes, we're subject to interest and penalties that are usually fairly large. Yet the IRS doesn't have to be held to the same standard. If they lose our materials, it's our responsibility to fix their problem. Doesn't seem quite fair, does it?

Incidentally, about two weeks later my client got a letter that said they found the tax returns and we should ignore the previous letter. Okay. I guess that's a big "never mind" and we should be glad. And that my friends, is how the IRS both entertains and amuses me.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

It's one nightmare everyone hopes to avoid: owing the IRS a lot of money. It's not pretty, but it happens a lot. What do you do? Well the worst thing you can do is to not file a tax return. If you prepare your taxes and find you owe a lot of money, you must still file the return. Not filing can open you up to penalties that you don't need added onto your bill.

You should try to pay as much of the tax bill as you can right away. That will limit the interest and penalties you will get for paying late, and those can add up fast. The IRS does accept credit cards, so that might be one option for paying what you owe. Obviously, you've got to be careful with this option as well, because credit card debt is expensive too.

It's also possible to make an installment plan with the IRS, whereby you pay a certain amount toward what you owe each month. The IRS will be looking for you to stretch and pay off your balance as quickly as possible, so don't expect that they will accept a few dollars a month. Offer to pay as much as you can, as fast as you can. Just get it over with!

The worst thing you can do if you owe money to the IRS is to ignore it. They will get their money from you one way or another, and tactics can include taking money out of your bank account or putting a lien on your home. Contrary to what you may have heard, the IRS is often very reasonable when you're being forthcoming and cooperative.

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Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

All you millionaires reading WalletPop are now put on notice: You're far more likely than me to be audited by the Internal Revenue Service. Who knew? Well, truthfully, we all probably expected that the IRS audited the wealthy much more often. It just makes sense... the more money there is to audit, the more money there is to squeeze out of the taxpayer. And the IRS has never been about collecting less money from us, the last time I checked.

So the IRS is offering up these odds of being audited... If your income is over a million dollars a year, you have a 1 in 11 chance of being audited. If your income is $100,000 or less per year, you have a 1 in 100 chance of being audited. And for those of you with incomes in between, your chances are in between also.

Lucky for us, audit rates are up across the board. The IRS audited almost 1.4 million tax returns in fiscal 2007, which was about 1% of total individual tax returns. And if you're one of the unlucky who are selected to be audited, you can find a few tips for getting through the trauma successfully on my corporate site.

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Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

If you're one of the millions affected by the Alternative Minimum Tax (AMT) temporary fix approved by the House of Representatives last week, you may have to wait to get your refund.

The fix is good for taxpayers, but bad for the Internal Revenue Service. Any form affected by the change won't be ready until February. So for the 3 or 4 million people who usually file in January, they may not get their refunds so early.