The agency we love to hate. The Internal Revenue Service.
Complicating the system of taxation for the common man for 108 straight years.
God bless America.
Never, ever, say out loud it can’t get any worse.
It can.
It has, in fact.
Here’s what’s wrong now, in my humble professional opinion.
The exercise of the power to levy penalties and interest has run amok. Even more than usual.
I’ll explain.
So…you know that if you pay late, or file late, they’ll send you one of those disturbing nerve-wracking #10 window envelopes with a demand for more money.
You didn’t know that? Then you haven’t had it happen yet. They do.
There’s a Section of the IRS code that covers all of this. They’ll tell you that they “have” to charge interest, by law.
Let’s keep something in mind here before I go on. Your U.S. Congress, the legislative branch of government, is responsible for the wording of laws like this.
If this doesn’t make you want to know everything you can about the senators and representatives you vote for before you do, it should.
Anyway…blah, blah, blah, it’s the law, we have to charge penalties and interest, so they say.
If you file late, and pay at the same time you file, you have two penalties.
They are called Failure-to-File and Failure-to-Pay.
How they levy these are based on the date you file and/or pay. More exactly, how long past the day they wanted it by.
We’re getting to how the system has run amok now.
Because of the IRS postal mail backlog since approximately April of 2020, they are months behind instead of mere weeks, and here’s where it gets ugly:
They are actually charging my clients penalties and interest based on dates they are entering that are anywhere from a week to months after the actual filing of the returns and extensions.
Yup. Read that again. Then check out this little nugget of context.
You’ve probably heard since childhood the decades-long concept of a tax return being on time if it’s postmarked by midnight of the due date.
Right?
So…what do you do when you mail your return on the due date, and months later your federal government calls you a liar, and tells you that you owe thousands in penalties because you filed and enclosed your check late?
And you know damned well you didn’t?
The IRS is behind. I sympathize. They have over 80,000 employees nation-wide, and they’ve been asked to do even more in the wake of the COVID storm.
Issuing stimulus. Paying advance child tax credit for six months. Not to mention amending thousands of returns that were filed prior to mid-March because they claimed up to $10,200 in unemployment benefits that suddenly, magically, became tax-free.
I get that they’re overworked. A lot of the problem is that many of the fines and penalties that are levied are done so out of an initial database prompt, and there are multiple human departments on top of that.
I’d love to have a free lunch for every time I’ve worked out a compromise with a Revenue Agent, just to have my client get a “nastygram” within the following week or two that makes it clear they didn’t get the memo.
The question again, and answer this free-association style here:
What do you do when you follow the letter of the law, and they come back on you and tell you that you didn’t?
Anyone? Anyone? Class? (Do you hear Ben Stein’s high school teacher character in Ferris Bueller’s Day Off?).
The IRS does have a process of appeal.
You may call them. If you don’t like the answer, you may make certain appeals.
If you feel the result of the appeal is not right, you can even take your case to Tax Court.
Is it easy? No.
Can Joe American Taxpayer navigate the murky waters of the appeals process easily?
Not so much.
I think two of the most complex phenomena of the modern American experience are health care coverages and income tax compliance.
Both are hopelessly complicated, and both make us all a little crazy.
Now, this new layer of nuance. Of nonsense.
The answer to my question is this: I’ve seen this infuriating problem more than once now, and there are definitely steps a representative of a taxpayer can take.
A representative that is an Enrolled Agent, a CPA, or a tax attorney.
There are things I can do, is what I’m saying.
Calls that can be made. Forms and statements that can be written.
The taxpayer has rights.
We’re expanding our tax and accounting services, which have always included the ability to make your IRS response calls for you, to include profitability and growth strategies, but rest assured…
…dealing with these little maddening annoyances is one of the things we will continue to do for you.
All part of the service.
Plus, it goes beyond the level of duty – helping people navigate the system is frankly what gets the blood pumping.
Want to learn more about how we keep your life less stressful and make your business wealthier in the bargain, as well as how to fight back in these insane situations?
Click here: https://www.owingsllc.com/work-with-me
2022 is just around the corner.
Let’s make it epic!