Former TV Anchor Glad She Challenged IRS
April 3, 2011 (The Columbus Dispatch, Ohio) Even the Internal Revenue Service acknowledged that former television news anchor Anietra Hamper kept meticulous records of the clothes and other items she bought for business use.
But detailed receipts weren't enough. An IRS audit -- and a tax judge -- concluded that nearly all the business expenses that Hamper listed as deductions on her 2005-08 federal income-tax returns were invalid, and they slapped her with a bill for nearly $20,000.
"I would hate for anyone else to go through this," said Hamper, 38, who decided to share her story as a tale of caution during tax season.
For years, Hamper had deducted the cost of the clothing she wore on air and for business functions, as well as other expenses she incurred while working as an anchor for WCMH-TV (Channel 4) and WBNS-TV (Channel 10) in Columbus.
Other TV anchors told her they did it, and professionals who prepared her taxes over the years told her it was fine. She kept her business clothes in a separate room at home and recorded costs and kept receipts. When a 2009 IRS letter asked for documentation of her 2005 expenses, she sent it off.
"I knew I had followed their guidelines," she said. The IRS didn't agree, and it sent her a bill for back taxes. When she protested, she got a notice telling her the IRS also was auditing her 2006, 2007 and 2008 tax returns.
Her tax preparer offered little help, so she called Westerville tax accountant Ron Lykins at the suggestion of a friend.
"Anietra felt, as well as I felt, that the clothing she purchased would be an ordinary, necessary job expense," he said. "The tax code says you can deduct all expenses ordinary and necessary to maintain your income."
But, Lykins said, what can and cannot be deducted is a gray area when it comes to business expenses.
The IRS would not comment on Hamper's situation but referred to IRS Publication 529. It says a taxpayer can deduct the cost and upkeep of work clothes if "you must wear them as a condition of your employment" and if "the clothes are not suitable for everyday wear."
It lists firefighters, professional athletes and delivery workers as examples of workers who might be able to deduct clothing as a business expense. Musicians and entertainers, it says, "can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear."
Hamper thought her deductions were legitimate, so she took the case to U.S. Tax Court, where she explained the deductions to a judge last fall. The judge ruled against her in late February and ordered her to pay $16,492 in back taxes, plus a penalty of $3,298.
"The general rule is that, where business clothes are suitable for general wear, a deduction for them is not allowable," the judge wrote. Most professionals, the decision said, "typically do not wear their business clothes for private or personal wear," yet they cannot deduct the cost of those clothes.
The judge also ruled that most other items Hamper used as deductions were personal, not business, expenses. They included contact lenses that helped her read the teleprompter, makeup, haircuts, manicures, teeth whitening and subscriptions to magazines and newspapers.
The decision doesn't surprise Donald B. Tobin, associate dean of the Ohio State University Moritz College of Law. Tobin teaches a class on federal income-tax law and uses the case of a saleswoman at a high-end clothing store as an example. In that case, the saleswoman argued that she had to wear clothing from the store while she worked, but that she never would have worn it otherwise, so she deducted the cost as a business expense.
The IRS disallowed the deduction. "It only cares about whether you can use it, not if you actually do use it," Tobin said.
Lykins believes that the IRS trampled on Hamper's rights and fined her unnecessarily.
"I've never in all my years of practice seen a situation where the IRS imposed a penalty," he said. "They've been waived in every other case. When you take on the IRS, you take on a lot,"
Hamper can't appeal the tax-court decision, so she said she'll make arrangements to pay the IRS. She said she's glad she fought for what she thought was right.
She's not as happy about a New York Daily News story about the tax-court decision in her case. The story, which traveled around the world, listed thong underwear among the items she deducted.
But Hamper hopes that others can learn from her experience.
"If your tax person says you can write it off," she said, "it still comes down to interpretation."