IRS to mom of two: You can't possibly live that cheap

Rachel Porcaro is the manager of a hair salon, and to look at her, you wouldn't think "tax fraud." If you were to walk into her home, you probably wouldn't think "these kids are obviously fictions of her imagination!"

According to the The Seattle Times, to see her with her two boys, 10 and 8, where they live with her parents, the three look more like a normal family headed by a single mom than any you could imagine. She works, pays her parents $400 rent a month, and pays to feed, clothe and provide for their preteen needs: toilet paper, toothpaste, soap.

That's not how the IRS sees it. Porcaro, the agency says, is making far too little, half the average necessary for a mom to survive with two children in the Seattle area.

At first it audited her, seeking to recover what the government said were $16,000 in unpaid taxes for that income officials were sure she must have been receiving under the table, somewhere.

When they couldn't find the hidden income, they decided she was lying about something else: supporting her children. Living with her parents hmm? Well, grandpa and grandpa must be paying her children's way! Shockingly, Porcaro wasn't keeping receipts for the food and T-shirts and shoes and soap she bought for her kids, so the IRS started auditing her parents; costing them $10,000 in accountant bills and yielding a discovery of absolutely zero fraud.

No matter. The IRS is resilient, and still believes mom wasn't supporting her own children, how could she? She got to keep her earned income tax credit -- which sparked the audit in the first place -- and was told she would have to pay back the taxes she owed due to fraudulently claiming her own children who lived with her as dependents.

A few weeks ago, after giving up on producing proof that she did, indeed, support her own children, she paid back $1,438 plus penalties and interest.

Now, her dad tells the Seattle Times, "we don't buy a roll of toiler paper anymore without keeping the receipt."

And what really irks the family is how focused the IRS was on targeting their family for living in an old-fashioned family-first kind of arrangement, three generations under one roof.

In this era of rising food prices, tight credit, urban areas exceeding their growth boundaries, and climate change, doesn't it make sense to reclaim some of the sensible efficiencies of all the centuries of our history up to this one? Multi-generational living has never been more of a rational decision; I know many families who've adopted it for both financial and environmental reasons, not to mention the benefit of sharing the load of childcare.

I just hope the IRS isn't going to go after them, too.