Is the IRS Audit in Everything Everywhere All at Once accurate? The movie won seven Oscars at last night’s 95th Academy Awards, the highest number of the evening, including for Best Picture. The movie begins with the havoc unleashed by IRS Agent Deirdre Beaubeirdra, played by Jamie Lee Curtis (Best Supporting Actress), when she audits the laundromat of Evelyn & Waymond Wang, played by Michelle Yeoh (Best Actress) and Ke Huy Kwan (Best Supporting Actor). You know I geeked out, watching a movie set in my old stomping grounds, the IRS! Man am I jazzed that audits are finally getting attention in popular culture: Whoot-whoot! But are the audit scenes realistic? Short answer: yes, but mostly no. Here’s how the movie differs from a real-life IRS audit.
IRS Audits Can Be Conducted in Person, Like the One in Everything Everywhere All at Once, but Rarely Are
In the movie, the Wangs wheel the supporting documents requested by IRS Agent Beaubeirdra into her cubicle at the IRS office. While this can happen, it’s rare for a taxpayer to personally deliver requested documents to their Auditor: taxpayers are almost always asked to mail, email or fax documents. What the movie gets right is that when auditors meet in person with taxpayers, it’s usually for audits of businesses, like the Wang’s laundromat. However, the severe shortage of agents made the IRS end taxpayer walk-in’s to IRS offices in 2021. It’s still possible to see an agent, but only by appointment. So, when the Wangs walk into Beaubeirdra’s cubicle, that had to be a scheduled appointment.
Finally, Agent Beaubeirdra immediately starts looking through the receipts Evelyn Wang brought in, and then circles and challenges one. This would almost never occur. Agents rarely inspect the documentation in front of the tax payer, especially not the first time they see a document.
An IRS Auditor Would Not Object to the Number of Businesses A Taxpayer Has Like Agent Beaubeirdra Does in Everything Everywhere All at Once
Agent Beaubeirdra objects to the number of “businesses” Evelyn Wang lists on her tax return. Evelyn’s husband says, “she gets excited about hobbies,” thereby throwing Evelyn’s deductions under the bus. An IRS Agent would never object to the number of business a taxpayer claims. They would object to deductions being taken for activities that are primarily or solely hobbies, rather than profit-making enterprises. Auditors demand proof that the activity is a business by asking to see a business plan, assessing whether and how the business makes profits, how many sales and customers the business has, etc. When I was at the IRS, the “business” that was most often discovered to be just a “hobby” was animal breeding. There’s a fine line between breeding animals for personal enjoyment and making a commercial concern out of it. For example, Faucher Family Farms may sound like a hen empire, but it’s really just my hobby.
The IRS Does Not Give Auditor-of-the-Month Awards Like Agent Beaubeirdra Had in Everything Everywhere All at Once
That Auditor-of-the-Month award on Beaubeirdra’s desk made me laugh (even before that trophy was used in wildly unorthodox ways). Monthly awards? The IRS could NEVER move fast enough to give out monthly awards!
While the IRS does give awards, they are paper certificates and tend to be for things like Best Mentor or General Achievement and other loosey-goosey designations. They often come with a $500-$1,000 prize and are based on criteria no one understands. An Auditing award is highly unlikely – what would a “best” auditor look like? Most revenue collected? Least taxpayers offended during audit? Most cases closed without regard to whether the tax assessment was accurate? The IRS is charged by Congress with assessing the correct tax, not the most tax so it’s hard to imagine any IRS manager wanting to open up the political can of worms that this designation would unleash.
The only physical trophy I know of at the IRS is “The Bird” (not that kind of bird!), a glass eagle given to IRS employees who make the largest donations to the annual Combined Federal Charity Program. So, the award angle in the movie was very inaccurate.
The Look and Feel of the IRS Office in Everything Everywhere All at Once Was Highly Accurate
The movie’s producers nailed the look and feel of most IRS offices, with the metal detector at the entrance, a chaotic lobby, slow elevators, and open floors full of cubicles. I was particularly amazed that the supply and broom closet in the movie so closely resembled the one in the Houston office that I worked at. How’d they do that? Amazing.
The Use of Police and Security Officers in Everything Everywhere All at Once Was Wrong
In the movie, Agent Beaubeirdra summons police who appear to be posted permanently in the lobby to quiet the melee on her floor. This is inaccurate. No regular police have full-time assignments at IRS offices. The security officers in the lobby of IRS offices are private security guards. If an emergency breaks out, then IRS Auditors would summon First Responders, such as the local police to the scene. There are IRS Officers who carry guns and act like policeman, but they are assigned to criminal investigations by the IRS, to accompany IRS Agents meeting potentially dangerous taxpayers.
The IRS Would Never Audit & Shut Down a Business on the Same Day as it does in Everything Everywhere All at Once
An IRS Auditor would never shut down a business, as Beaubeirdra does toward the end of the movie. That’s because the IRS Assessment Division is strictly separated from the IRS Collections Division. As an auditor, Beaubeirdra’s job is only to determine the correct amount of tax and whether there’s a deficiency in payment. Once she makes that determination and if the taxpayer protests the auditor’s conclusion, then their file is passed to the Collections division of the IRS. The only job of an IRS Collections agent is to extract payment from the taxpayer. Collections agents never determine the correct amount of tax. Back to the film: only an IRS Collections agent would have come to the laundromat to shut it down, not an employee of the IRS Assessment Division, like Agent Beaubeirdra.
Moreover, no business would ever, EVER be audited and shut down on the same day. The IRS does not work that fast, as anyone who’s tried to reach them recently knows. Even before the IRS became so massively underfunded and understaffed (during the 2010s), it moved at a glacial pace. In order to shut down a business, a Collections officer would first send at least a half dozen notices to the taxpayer, reminding them of the tax owed, offering to set up an Installment Agreement payment plan, threatening to levy on the business’ bank accounts, threatening to put a lien on any real property owned by the business, and then actually levying on the accounts of the business to repay the tax debt. Even then, it would be rare for the IRS to shutter a business. It does so only when the taxpayer has not only refused to make any payment, but also openly evades the IRS such as by moving to all cash transactions to avoid the levy.
So, while the Daniels (the film’s producer-directors) got many things wrong about IRS audits, I applaud them for shining bright light on the audit process!
Are you being audited? Call me with any questions about the process! Got questions about movies? Probably best to call someone else…
March 13, 2023