The IRS forgot the lube ~ Welcome to GWB's America

Well folks, it's tax return time, and for my service-wage self, that usually means I get a decent (for me) chunk of change in the form of a rebate.

Not this year...

~my story in theresmoresville~

Apparently, three years ago, I underreported my income (forgot to include a second job I had worked for a few months) by roughly $2,000. So instead of the $8,500 I reported, it seems my income was around $10,500, instead. I found out about this because the IRS website has just informed me that my return of $1,100 this year has been adjusted to exactly zero to pay the taxes I owe on that mistake. And they say I still owe them nearly $1,000 more, due to interest and fees.

That's right, kids. In George W. Bush's America, a mistake in my tax return (and, just so we're clear, I had already paid taxes on the unreported income via paycheck withholding) costs me 20% of my income for that year. I would happily pay whatever I needed to get things square with what they would have been had I been accurate on my return (a matter of less than $100, I'll wager). But that won't be enough for them.

I would fight this, but I can scarcely afford a lawyer, and it is highly doubtful to me that I would find much help from appealing to the IRS. So I have lost my return, which I was counting on this year, and it is likely that my little rebate check promised in May (which I don't actually support, btw) will also be appropriated for this 'debt'. There's a war on, and I suppose the money for those substandard helmets has to come from somewhere.

Welcome to George W. Bush's America. Where low income citizens are targeted to fund an unjust war, while fat cats find the deck stacked even more in their favor by the day. Where we are trampled and denigrated, where we are nothing in the face of the machine.

And as angry as I am about my situation, the worst part is that I know I am getting it easy, compared to some.

Compared to the soldier wounded in body and spirit trying to make it in a society that has forgotten him, now that he can no longer pull a trigger, my situation is nothing. Compared to the mother of a disabled child who has found the programs she depended upon to care for that child defunded, my situation barely registers. Compared to the young black man locked away for decades for possessing a substance that would merely rate probation for a white guy, my situation is a cakewalk.

And given how much my situation sucks, doesn't that mean we have come to such a tragic point as a society?

Let us not forget the stakes of this election, and whether you support Obama or Hillary, let us not forget that we stand together or fall separately. And we will each have our own little outrages and tragedies as we spiral towards the bottom.

We must prevail in November.

•  Tips

  Hell, I could use anything I can get. The taxman is a-coming after me, maw!

  by Aethern on Wed Feb 13, 2008 at 09:06:53 PM PDT

  •  I'm not sure I understand

    what happened. If you don't mind giving a few more details we might give you a better idea of what to do. First, did they explain to you how a 200 dollar tax bill turned into over $2000. You can get the breakdown and definitely appeal the penalty. Was this independent contract or regular wage income? It appears it was not independent contractor since you say taxes were witheld on them.

    Also, you should have received a series of notices in reagrd tot his within about 18 months of the underreporting. Do you get those notices? Have you moved frequently or at all?

    Apparently, three years ago, I underreported my income (forgot to include a second job I had worked for a few months) by roughly $2,000. So instead of the $8,500 I reported, it seems my income was around $10,500, instead. I found out about this because the IRS website has just informed me that my return of $1,100 this year has been adjusted to exactly zero to pay the taxes I owe on that mistake. And they say I still owe them nearly $1,000 more, due to interest and fees.

    That's right, kids. In George W. Bush's America, a mistake in my tax return (and, just so we're clear, I had already paid taxes on the unreported income via paycheck withholding) costs me 20% of my income for that year. I would happily pay whatever I needed to get things square with what they would have been had I been accurate on my return (a matter of less than $100, I'll wager). But that won't be enough for them.

    by jennybravo on Wed Feb 13, 2008 at 10:52:07 PM PDT

    •  I don't have alot of info, yet

      Other than the fact that I owe, and a general idea of why, I don't know a whole lot.

      It was wage income that is in question, and this is the first I've heard from them that I owe anything. As a matter of fact, I filed last year and got a return with no problems.

      And yes, I've moved quite a bit over the past few years, so it's quite possible I missed whatever notice they may have sent.

      I would definitely appreciate any advice you may have!

      by Aethern on Wed Feb 13, 2008 at 10:55:56 PM PDT

      •  First

        What tax year was it? Do you have child that you took as a dependent that year? Did you get earned income credit?

        by jennybravo on Wed Feb 13, 2008 at 11:00:32 PM PDT

        •  so

          I kind of suck at math, but these are some figures I came up with for the situation I described above.

          Assuming you were single with no children, you would have received Earned Income Credit of about 225 dollars for 2004 on an income 8500 dollars. If your income was 2000 more, then at 10,500 your Earned Income Credit would have only been about 75 dollars. There is about 150 dollars you would have to pay back for earned income credit that might have been overpaid to you.

          Your income tax on 8500 dollars (after your standard deduction and personal exemption are taken out) would have been about 55 dollars. On $10,500 it would have been about 255 dollars. So that is 200 more dollars you would owe with the extra 2000 dollars.

          So, what I figure is that the extra 2000 dollars in income would have cost you about 350 dollars more in taxes. (assuming you are single, no children).

          In addition to the 350 dollars, there are interest and penalty payments.  If you figure interest at 8% for 3 years, I think the interest is about 150 dollars. That would only be about 500 dollars you owe (+ penalties) as far as I can tell. For you to owe over 2000 seems very wrong to me. I can't imagine penalties that high unless they were charging for fraud penalties. Fraud penalties are penalties for purposefully understating your income. They might put it on automatically until you appeal it and explain that you didn't do this on purpose. There are also late payment penalties, which (I think) maximize out at about 25% of the unpaid tax. You can appeal that too. But even with the late payment penalty (which would be around 90 dollars or so) that would still only make the total you owe around 600 dollars.

          I think almost by default they charge the maximim penalties when they have not heard from you at all. Once you get in contact and explain your situation, they can remove many of those.

          This happened to my sister and niece. I went through the whole process with them since I was the only one in the family with a computer. Plus I always seem to wind up doing stuff like this (insurance, taxes, etc.) for people!  Both of them had to pay the back taxes and the interest. I think most of the penalties were removed for them. My sister got lucky considering she was self-employed and didn't file any returns at all. But when we figured her business expenses and income, (keep you receipts folks!!!) she wound up getting a small refund for 1 year and owing a small amount for the other 2 years because she was entitled to Earned Income Credit and Child Care credit.

          You should also see if you are entitled to a deduction for student loan interest payments or possible tuition credits if you were in school that year or paying back student loans. Those could lower your taxes.

          If you have kids you can claim as dependents, pretty much all of the figures above will change. But I can't say how for sure.

          Either way, what you need to do is find out what the additional tax is, what the interest is and what the penalties are. Get the figures separately and not as total, so you know what is being charged for what. They will send you the information. They can maybe tell you over the phone. Let them know you had moved and never received the notices and so had no idea this was happening. Once you get that information, you can look into appealing penalties charged and things like that. Just be nice and respectful to whoever you talk to. And remember they might be wrong. Always get the name and identification of the person who answers your questions and write this and the time and date you called. If something doesn't seem right or make sense call and talk to someone else. If intially things go against you, can appeal even further

          I hope this makes sense. And keep in mind I'm just sort of figuring these totals on my own. And I am assuming a whole lot of things! I could be way off....

          by jennybravo on Thu Feb 14, 2008 at 01:07:22 AM PDT

          •  thanks!

            Wow, this is alot of information, but I think you've given me a great start in how to approach this. I think my next step has to be to get the numbers together of my W-2's and return for that year, and to see what the numbers actually are for what the IRS is charging me.

            Wish me luck!

            by Aethern on Thu Feb 14, 2008 at 05:17:18 AM PDT

•  They should be paying you for working

  That's at the level where you should be picking up the earned income tax credit.

  Hand write your story up politely to the IRS. They just might adjust the numbers in your favor if you do. Don't accept this at face value.

  by FishOutofWater on Wed Feb 13, 2008 at 09:12:26 PM PDT

•  A relative appeals the IRS directly all the time

  and almost always gets money back.

  If your case is sound, you might consider going for it.  They especially don't like not having the money in their hands before you settle with them, from what I've noticed.

  by wader on Wed Feb 13, 2008 at 09:12:26 PM PDT

  •  That's what I was going to say.

    You don't have to get a lawyer to appeal to them, but you probably have to contact them in person, rather than online.

    It's worth a shot, rather than just paying the money.

    by Brooke In Seattle on Wed Feb 13, 2008 at 09:14:12 PM PDT

  •  that's encouraging

    Perhaps I'll give it a shot, after all. It can't hurt, I suppose, though it's hard to get one's hopes up. Any advice on where to direct my appeal, specifically?

    by Aethern on Wed Feb 13, 2008 at 09:15:38 PM PDT

    •  I'll ask and hopefully get a response

      soon.

      No promises, because I've been organizationally out to lunch these past 4-6 months, but if anything gets back to me I'll post it.

      by wader on Wed Feb 13, 2008 at 09:18:49 PM PDT

      •  No response yet, but coincidentally

        I need the same advice!

        My state taxing authority sent me a notice to pay up for something which they felt was placed against an incorrect categorization . . . making me owe a bit.  I honestly categorized this one item based upon information from those who provided the investment in question (in this case, our local government), so unless I completely misunderstood the info given, I might have a case to argue that my original taxes were correct.  They were honestly done, at least.

        Hope my relative has time to reply soon.

        by wader on Thu Feb 14, 2008 at 06:09:55 PM PDT

    •  If you do appeal,

      put yourself clearly at their mercy and explain that this is a one time oversight that won't happen again. They may let you slide. Like Judges, if the IRS appeals folks detect any sarcasm, disrespect, or belligerance, they dismiss your appeal.

      by Krum on Wed Feb 13, 2008 at 09:26:46 PM PDT

      •  Good Advice

        Be polite and professional (spell check is your friend).

        One year, just out of college, a company I worked for shifted me from part-time employee to contractor, keeping me at the same pay rate, but ceasing to take out taxes, and not mentioning the implications of the extra share of social security contractors must pay. I, being stupid, didn't know what was about to befall me tax-wise. When the contract was up, I went skiing for 4 months (ok, so it's hard to have sympathy, but I knew I'd never have the chance again for the rest of my life, so I took it).

        Anyway, when April came round, I not only owed a boatload of unanticipated taxes, I had no money. I found that a clear, calm, professional letter explaining my predicament (plus regular small checks toward what I owed) kept them happy. They are often willing to cut some slack to people honestly trying to correct a mistake.

        by mataliandy on Wed Feb 13, 2008 at 11:02:35 PM PDT

      •  Don't put yourself at their mercy

        Find out what the tax law actually says.  Figure out what was reported incorrectly, and find out what penalties there are, and whether it's possible to get them waived.  If you make a mistake just own up to it.  

        I don't think appealing to mercy is worthwhile, people here sob stories all the time.  On the other hand it is important to make sure you're not getting screwed over excessively.  

        by Asak on Thu Feb 14, 2008 at 02:54:31 AM PDT

    •  Call

      the regular tax advice number and tell them that you found out that the IRS took your refund and you're not sure why. They should transfer you to somebody who can tell you what happened. I don't know how you found out they were taking your refund, but it seems like they should have number you can call listed there. If not, look in your tax booklet or at the irs site. I can't remember exactly with my sister, but she had moved and they needed her previous address or something. I was able to talk to them once they had talked to her. She just had to be on the phone with me and tell them it was all right to talk to me after they verified she was who she said she was.

      by jennybravo on Thu Feb 14, 2008 at 01:26:15 AM PDT

  •  I have a friend who considers it his patriotic

    duty to get audited.  Every year he gets the call, every year he goes in, every year  they give him half of all the questionable stuff.  The drawback - he documents everything.  I mean everything.  But he gets not only his due, but negotiates beyond that.  He is always respectful, shows his creds as landlord just trying to make ends meet, always shows up with mounds of documentation, always negotiates, and - always wins. Apparently at the beginning of the tax code there is a statement of purpose that says it is the taxpayer's duty to reduce their taxes.  He takes his duty seriously.

    by sailmaker on Wed Feb 13, 2008 at 09:50:43 PM PDT

•  File an Ammended return

  It is form 1040X. The form and instructions are available for downloading on the IRS aite.

  by GW Chimpzilla on Wed Feb 13, 2008 at 09:14:34 PM PDT

  •  If you are really stuck on where to start...

    call H&R Block and let them handle it.  They will take a piece of the savings, but you will be ahead of where you are and have someone who knows how to handle an amended return.

    I wouldn't bother with a lawyer.  A decent accountant (CPA) is all you need.

    by 8ackgr0und N015e on Wed Feb 13, 2008 at 09:39:38 PM PDT

    •  NO!!!

      Not H&R Block...they suck. Most of those franchise tax places do.

      by jennybravo on Wed Feb 13, 2008 at 10:42:53 PM PDT

      •  Ditto on that

        H&R block is a mill, they have the set of things they bother to look for, and ignore all the rest.

        Find a local accountant.

        They're not much more expensive, and they'll know the tax code better, and be able to find less common deductions, which may make it so you owe little or nothing, thus saving you far more.

        by mataliandy on Wed Feb 13, 2008 at 11:07:27 PM PDT

        •  I know

          a couple of young people with kids who got screwed up by H&R block and some other franchise place.
          One was a single father who they let claim head of household and earned income credit when he was supposed to. When they matched up the SSN of the kid to see if it was on any other returns they found out the mother also took the kid as a dependent. She was the one who had the right to, so he had to pay a whole bunch of money back. Apparently, H&R or whoever didn't ask about who was able to take the child. The father just answered yes when they asked him if he had a kid. They asked if he paid child support and then they said he could take the child as a dependent. That was apparently totally wrong. He was paying back money for a long time.

          by jennybravo on Thu Feb 14, 2008 at 01:38:31 AM PDT

  •  I'm not sure

    but it sounds like the IRS has sort of done that for him. Until she/he finds out exactly what happened, it may confuse things further to file an amended return.

    by jennybravo on Wed Feb 13, 2008 at 10:54:37 PM PDT

•  sorry for your troubles

  but I don't think that GWB is to blame.  The IRS has had the ability to apply quite onerous fines/fees/interest for failure to pay taxes for some time now.

  by GeoGrl on Wed Feb 13, 2008 at 09:18:59 PM PDT

  •  Jinx

    by Krum on Wed Feb 13, 2008 at 09:22:55 PM PDT

  •  it's about priorities

    I can't remember where I read it, so with no link, you'll have to trust me, but a year or so ago, I read a long article regarding the IRS focusing alot more resources on enforcing tax regs on mid and low income taxpayers, while corporations and upper income taxpayers were often left alone.

    It's kind of the same thing where the civil rights division of the DOJ all of sudden can't find anything to do, and the EPA seems more interested in protecting the interests of the logging industry than the ecology of our environmental situation. The priorities of the bureaucracy are among the most dramatic ways in which the President can have a tremendous effect on the lives of us all.

    by Aethern on Wed Feb 13, 2008 at 09:24:17 PM PDT

    •  That happens every couple years

      they always (or claim to) shift focus back and forth. Basically the focus of the IRS is to maximize revenue. Period. And they will, like all organizations, go for the low hanging fruit. Which in this case happens to be you unless you push back.

      Do not get a lawyer, get a good accountant, spend about $500, check on EIC, and you might end up on the plus side.

      by 1918 on Wed Feb 13, 2008 at 09:49:42 PM PDT

•  I'm sorry for your troubles

  I went through the same thing during the Clinton 90's. Sadly, this is one thing that you can't blame on Bush, or any other Pres, for that matter. Its just the nature of the beast.

  by Krum on Wed Feb 13, 2008 at 09:22:15 PM PDT

  •  hmmmm

    must resist the urge to make snarky comment about the Clinton Administration... must resist... can't stop it.. must hold out...

    by Aethern on Wed Feb 13, 2008 at 09:25:43 PM PDT

    •  I believe you just did, very eloquently

      by groggy on Wed Feb 13, 2008 at 09:35:36 PM PDT

•  But what about the Bush tax cuts?

  Didn't you reap vast refunds like Gates and Buffet?  I think their savings were in th BILLION$.

  I bought a couple books of stamps with mine.

  by groggy on Wed Feb 13, 2008 at 09:38:33 PM PDT

  •  regarding the original tax cuts

    At a family gathering when my Baptist minister, Bush supporting uncle said something about how they would help people, my grandma replied, "just you wait and see how much that $300 ends up costing us". I'm paraphrasing, but you get the drift.

    by Aethern on Wed Feb 13, 2008 at 09:55:21 PM PDT

    •  Not costing us

      as much as our grandchildren.  Someone has to pay the bill eventually.  

      I'm pretty sure they won't think of us in terms of the greatest generation, more like the gullible generation for falling for platitudes like Reagan's 'deficits don't matter'.  

      by groggy on Wed Feb 13, 2008 at 10:09:08 PM PDT

      •  if we make it that far

        not to be pessimistic, but I've held the opinion for several years that the decisions made in this country over the next decade will determine whether we survive as a nation or tear ourselves apart from the inside.

        Maybe we figure some of it out, enough of it to see our way into the future.

        Or maybe we join the Soviets as a rapidly changing world passes us by.

        But I'll tell you this, Obama gives me a fair amount of hope that we will find our way. Hillary makes me feel like it's possible, but with her, it's just as likely our societal greed will win out and prevent us from moving forward. With McCain...

        Well, with McCain let's just say I'll be learning as much as I can about survivalism...

        by Aethern on Wed Feb 13, 2008 at 10:15:06 PM PDT

•  I can sympathize

  We had to pay more than that last year. This year it's about half that, but still bad -- especially with a kid coming.

  If it's any consolation, our future president understands living in debt. If Barack Obama hadn't written a couple best-sellers, he'd still be paying student loans.

  by droogie6655321 on Wed Feb 13, 2008 at 09:43:48 PM PDT

•  You are not the only one they are doing this to

  I have heard from many people now that the IRS claims they "miscalculated' a few hundred bucks from years ago and with penalties and interest so they now owe in the thousands. Remember the IRS is a private business and keeps any money it collects. They run this scam successfully because they target working poor who are unable to fight back. The mob is now the government. That is how fascism functions.Nothing wrong here that a little dose of impeachment wouldn't cure. Join the Conyers Bomb. People are calling faxing and e-mailing Conyers nonstop day and night to demand impeachment. It might get your money back and it will make you feel better to write and call repeatedly. Impeach Impeach Impeach I won't take no for an answer

  by barbybuddy on Wed Feb 13, 2008 at 11:30:17 PM PDT

  •  I call bullshit. Evidence?

    Remember the IRS is a private business and keeps any money it collects.

    by perro amarillo on Wed Feb 13, 2008 at 11:59:37 PM PDT

    •  no way they are a private business eom

      by jennybravo on Thu Feb 14, 2008 at 01:11:28 AM PDT

    •  Sadly It's true

      Link

      They do keep some of the money

      The private debt collection program is expected to bring in $1.4 billion over 10 years, with the collection agencies keeping about $330 million of that, or 22 to 24 cents on the dollar. Link

      And it is true they are going after the little people:

      the I.R.S. will turn over data on 12,500 taxpayers — each of whom owes $25,000 or less in back taxes — to three collection agencies. Larger debtors will continue to be pursued by I.R.S. officers.~ NYT linked above~

      by arkdem on Thu Feb 14, 2008 at 03:55:50 AM PDT

      •  The IRS - a government agency- uses contractors?

        And they're (gasp) going to pay them? To contact people who don't pay their fucking taxes and try to collect?

        Jeeesh! Those rotten bastards.

        You can be against privatization - as I am - and still tell the truth.

        by perro amarillo on Thu Feb 14, 2008 at 06:01:29 AM PDT

        •  Where did the links lie? N/T

          by arkdem on Thu Feb 14, 2008 at 10:11:35 AM PDT

          •  Directed to first poster: IRS "private company."

            by perro amarillo on Thu Feb 14, 2008 at 12:00:54 PM PDT

•  You definitely need to talk to the IRS

  Figure out exactly what the penalties were and why.  The IRS usually assumes the highest tax rate possible with the least deductions when they do this sort of thing.  Don't just assume you owe the penalties.  I suspect if you appeal you will get things reduced to a much lower number than this.  

  If, for whatever reason, you can't work it out with the IRS agents directly, ask to be referred to the IRS Tax Payer Advocate service.  They are a separate entity which helps in these sorts of circumstances.  

  by Asak on Thu Feb 14, 2008 at 02:46:41 AM PDT

  •  By the way...

    The number one rule when dealing with the IRS is realizing that the IRS as a whole is overwhelmingly incompetent.  The person you talk to on the phone very well may not know what they are talking about.    

    by Asak on Thu Feb 14, 2008 at 02:50:08 AM PDT

•  You may get help here

  Looks like there is a tax advocacy group (independent)You might want to try them.
  Link
  They as a group do seem to be fighting for us rather than against us.

  by arkdem on Thu Feb 14, 2008 at 04:09:22 AM PDT