There are a myriad of ways that you can cause more headaches than you solve in an audit. A case released today by the Appellate Court for the Second District of Illinois shows how easy it is to dig yourself a hole.

The Byrds were audited by the Illinois Department of Revenue (IDOR), which disallowed their claims of gambling losses. The IDOR found that, despite the Byrd’s claims, they were not professional gamblers. The Byrds asserted they were, and pursued the issue.

Notice what the issue is here: can gambling losses be claimed on an Illinois return? Yes, if you’re a professional (via Schedule C), and no if you’re not. In their haste to show how much they lost (note: this is why you hire a lawyer), they produced the casinos’ slot machine tally sheets, which showed all of their wagers – winning and losing – and included….wait for it…..winnings of less than $1,200.00, the threshold in for requiring a W2-G form be filed. Predictably, the IDOR increased the Notice of Deficiency that it had issued the taxpayers. Luckily, through an administrative snafu, the amended Notice was canceled, and the court declined to reinstate it (though it could have).

This is frequently what happens when a taxpayer tries to be too helpful, and thinks that they can represent themselves in an audit. More often than not, the taxpayer inadvertently provides ammunition for the IRS (or in this case, the IDOR) to ‘pile on’ even more tax liability or to dig deeper into their financial records. It’s the kind of attention you don’t want.

The sad part is, had the Byrds hired a lawyer, they might not have wasted valuable time pursuing a losing strategy. Don’t be the Byrds. If your return is selected for an audit, do yourself a favor. Call a lawyer, and get help from someone trained to know what to do.