And yes, even the IRS is busy turning over every stone looking for money.

We just survived an audit of our 2007 taxes.

When we purchased our bus in September, 2007, we decided against setting up a Montana LLC to avoid (notice I didn't say "evade") paying the sales tax due the State of Florida...... so we paid the 15 large to the Sunshine State, took a deep breath and just considered it part of the cost of buying the bus.

At least, we could claim the sales tax paid to Florida on our Federal 1040 return.

Fast forward to 2009 and a thick envelope arrives from the IRS (never good...tax refunds don't come in large envelopes!) and they inform us that the are conducting an "Examination by Mail" and if we would just send them some additional information regarding the sales taxes claimed in 2007 (they never tell you EXACTLY what they are looking for) all will be well.

So, I gather up our bus sales agreement showing the State of Florida sales tax, send off a copy and and assume that will be the end of it.

Nope.... I get another letter that if I simply send them a check for roughly 7 grand, which includes taxes due, interest and penalty's, that I won't hear any further from them. I question this and they reply that I didn't prove that "I actually took posession of the bus". What I had provided was a promise to buy. How were they to know I actually purchased it?

Well, long story short, after many months, several mailings and numerous copies of all sorts of associated documentation and NEVER actually being able to speak to an actual human being employed by the IRS..... they finally accepted the fact that we DID INDEED PAY THE SALES TAX that we claimed on our '07 return.

And they closed our file without amending our return.

That's the thanks I got for doing what I believed to be "the right thing."

So, it does not surprize me one bit that states will be giving the Montana LLC's a very close and hard look.