Have you considered the potential penalties you might face? I just went through something similar and ended up owing about 20% on top of the additional taxes, plus interest dating back to the original filing deadline for each year.

This is a serious situation that unfortunately happens more often than people realize. As someone who works in tax compliance, I've seen cases where preparers inflate deductions thinking they're "helping" clients, but they're actually putting them at significant risk. Your instinct to be concerned is absolutely correct. The fact that you have such large discrepancies ($2,700 vs $800 and $13K vs $3K) suggests this wasn't just aggressive but legitimate tax planning - these sound like fabricated deductions. Here's what I'd recommend: First, document everything. Gather all your actual business expense records for those years so you have concrete evidence of what your real expenses were. Then have that conversation with the CPA - ask specifically what documentation they used for each major deduction category. Their response will tell you everything you need to know about whether this was intentional. If they can't provide reasonable explanations or documentation, you should absolutely file amended returns. Yes, you'll owe additional taxes plus interest, but voluntary correction shows good faith and typically avoids fraud penalties. The alternative - waiting and hoping you don't get audited - is much riskier. The IRS takes a dim view of preparers who fabricate deductions, and if this was intentional, other clients are likely affected too. After you get your own situation sorted, consider whether reporting is appropriate.

I went through this exact same process two years ago and completely understand your frustration! The 120-day timeline is their worst-case scenario, but in my experience, most cases resolve much faster than that. A few things that helped me get through it: • Set up automated transcript monitoring through the IRS website - check weekly, not daily (for your sanity) • When the official letter arrives, respond immediately if they request documentation • Keep all your medical expense records organized and easily accessible • Don't send unsolicited documents - it can actually slow things down My case took about 78 days total, and the actual refund hit my account 5 days after they updated my transcript to show "refund sent." The hardest part is just the waiting and not knowing exactly where you stand in the process. Since you mentioned you have everything properly documented, you should be in good shape once they actually review your file. The medical expense trigger is super common - it's not personal, just their algorithm flagging higher-than-average deductions for verification. Hang in there! Most people I know who've been through this got their money well before the 120-day mark. 🤞

I'm dealing with this exact situation right now too! Filed in February and got the 971 code last week. It's incredibly frustrating because like many of you, I have legitimate medical expenses that are fully documented - about $15k from cancer treatment last year. What I've learned from calling multiple times is that the IRS has been overwhelmed since 2020 and their review department is severely understaffed. The agent I spoke with yesterday was actually pretty helpful and explained that medical expense reviews typically focus on whether the expenses exceed 7.5% of your AGI and if the documentation appears complete in their system. She mentioned that if they don't need additional documentation from you, the review could be as simple as a supervisor signing off on the return - but you're still stuck in the queue waiting for that to happen. It's basically a bureaucratic bottleneck rather than intensive scrutiny of your actual expenses. The most helpful thing I learned: if you haven't received a CP75 letter within 30 days of getting the 971 code, it likely means they're not requesting additional documentation and you're just waiting for the review to be completed internally. Hang in there everyone - we'll get through this! At least we know our expenses are legitimate. 💪

Has anyone tried contacting Keeper through Twitter? Sometimes companies respond faster on social media than through their official support channels.

I'm actually dealing with this same issue right now! I'm a freelance consultant and have been using Keeper for about 6 months. The bulk editing limitation for percentages is super frustrating, especially for mixed-use expenses like home office utilities and phone bills. One workaround I discovered is to create separate "rules" for different expense types in Settings. You can set up automatic categorization rules that also apply default business percentages. It's not perfect for existing transactions, but it helps going forward. For your existing 75+ car expenses, honestly the export-to-spreadsheet method mentioned earlier might be your fastest option right now. You can export, do a find-replace to change all the percentages from 100% to 56%, then re-import. It's clunky but beats editing each transaction individually. I've also been tracking this as a feature request with them - apparently it's one of their most requested features so hopefully they'll add proper bulk percentage editing soon!

Whatever you do, respond to everything by their deadlines! I ignored an audit notice thinking it wasn't legit (it looked kinda scammy) and ended up with a default assessment that was WAY worse than if I'd just responded with my documentation. Ended up costing me an extra $2,300 plus the stress of dealing with a collections case instead of just an audit.

I'm going through my first audit right now too and honestly, reading everyone's experiences here has been incredibly helpful. My audit is for home office and mileage deductions totaling about $4,200. One thing I learned from my tax preparer is to organize everything chronologically and create a summary sheet explaining each expense category. The IRS agent told me they appreciate when taxpayers make their job easier by presenting organized documentation with clear explanations. For your missing receipts, don't panic - bank statements showing the transactions can often work as backup documentation, especially if you can provide context about what the expense was for. I had to recreate some documentation using credit card statements and calendar entries showing business meetings that corresponded to meal expenses. The waiting is definitely the worst part. My audit has been going on for 2 months now and I'm still waiting for their final determination. But so far the IRS agent has been professional and reasonable about working with the documentation I've provided.

Has anyone successfully gotten the IRS to waive penalties for late 941 filings? I'm in a similar position but afraid of getting hit with thousands in penalties even though we paid everything on time.

I'm dealing with a very similar situation right now! My small business also used QuickBooks for payroll and tax payments, but somehow we missed filing several 941 forms in 2022. I just got an IRS notice last week showing discrepancies between our W-2s and what they have on file for quarterly returns. One thing I learned from calling the IRS Business Tax Line is that they have a specific department for employment tax issues (different from individual tax problems). The representative told me that as long as you can show you made the payments on time through EFTPS or QuickBooks, they're usually willing to work with you on penalty abatement. She also mentioned that many small businesses run into this exact issue when winding down operations - the focus shifts to closing everything up and sometimes the quarterly filings get overlooked even though the payments continue automatically. I'm planning to gather all my QuickBooks payment confirmations and file the missing quarters this week. The IRS gave me 30 days to respond to their notice, but they said filing sooner rather than later shows good faith compliance.