Government Efficiency - Taxes

Friday, 15 April 2011

Since this has happened to me two years in a row, I felt compelled to blog about it. The IRS seems to be incredibly talented at losing documents. I sent in my Oregon return in February last year, well before the tax deadline. I calculated that I had a refund of somewhere close to $100 so I didn't send in any payments.

An agent sent it back, saying my accounting was being checked and I didn't need to send in a payment or expect a refund. They gave me a telephone number which I called to follow up. The agent told me I would receive a letter in the mail about my account. I did receive a letter saying that I owed $3,800 plus late penalties and interest payments since I didn't send in my return on time (which I did and could prove). I wrote a letter stating all of this and explaining they didn't include my state payments (on my W2) which are removed from my paycheck every month.

They sent me a letter back saying I never sent in my W2 (which I did and could prove but it didn't matter). Guess what? During this entire time... the INTEREST was adding up even though the account mistakes were because of the IRS, not me. I sent in my W2 again via fax and mail. 30 days later, I started getting bills for the $3,800 plus interest. They claimed, again, I had never sent in a W2 form so could not give credit for the tax I'd paid throughout the year. (Doesn't the IRS have internal record of that anyway?)

Long story short, I had to pay $100 to the IRS. No problem, my bad - although I could never figure out how they got that. When I paid it, they refunded the late fee and interest after I sent letter(s) begging. Guess what -- this year they sent a taxable income form saying the $37 was a TAX REFUND. I let it all fade away as a bad dream until the same thing happened this year.

The IRS sent my return back asking for the documents that proved I was a 1st time homebuyer and qualified for the tax credit. I had sent it in the first time, following all directions to the letter. They apparently had misplaced it. Okay, rather than losing it, I sent it all in again. Guess what I got in the mail today? A long letter saying that I need to send in form 5405 for the Homebuyer tax credit and now 1040X to amend my tax return since I was adding "new information." What??? I SENT IN 5405 THE FIRST TIME. This is not new information. Wowser. Plus, after the IRS sent the letter asking for more information, they deposited the tax credit into my checking account. What does that mean!?

I have this vision of the IRS office in Austin, Texas as a sort of McDonald's indoor playground. All of our papers come in and are thrown in a pile in the middle of the gymnasium-like floor. Employees take off their shoes and swim through the piles smiling and talking about their plans from the weekend. In a moment of abandonment, perhaps someone grabs a few papers and throws them in the air, laughing. There's a good, warm vibe. Then, after everyone has 2 or 3 cups of coffee, someone rings a bell and agents work through the piles at random to match docs up to last names. It is a game of skill and when an agent scores by locating two papers with the same social security number they get passed on to the mail department. That's where I imagine someone painstakingly folding new forms, stapling them nicely in the top right corner and lovingly printing out mailing labels to send them back to the taxpayer who may just have a nervous breakdown when she's asked for the same documents for the third time.

I've been on hold waiting to talk to a representative for 28 minutes and I will not give up. :( Hopefully your tax season is going better than mine.

UPDATE - After waiting on hold for 32 minutes, an agent looked at my account and said, "What about it? This has already been processed. You have the credit in your account." I said, "Yes, but I got a long letter today asking for five more documents from the IRS." "Oh, just ignore that. Bad timing systematically, I guess." "Okay, I'm just taking notes, what is your name and ID number? (He gives it.) And your advice is to ignore the 916c letter from the IRS?" (Silence.) "Well, ma'am, if you'd like to respond to it by mail, stating that you've already sent in the required documents and have received the credit, that might be best." "I see."

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