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An IRS Tale of 9 Cents ~ It Could Happen To You

January 4, 2009 Opinion, Taxes View Comments

Big Tip of the Hat to Mount Virtus

We’ve all heard the horror stories about how the IRS completely destroys people. We’ve heard the tales of their seizing property and liquidating accounts. We know, that the IRS is the only law enforcement agency that doesn’t need a warrant to search. Deposit or withdraw more than $10,000 and the bank has to notify the IRS. The Internal Revenue Service is THE most invasive governmental body.

For all the bitching going on about the NSA and wiretaps, nobody on the left has had the stones to complain about the intrusive nature of their favorite governmental agency – the IRS.

So here’s a story about the IRS and their incredible insanity.

From the Detroit Free Press:

“It’s not the money; it’s the principle” is an old saying that usually brings a knowing, world-weary scoff from veteran Detroit criminal defense lawyer James Howarth.

“But I think this time with the IRS, it is the principle,” Howarth said.

After all — this is about 9 cents.

While many may fight the Internal Revenue Service over thousands of dollars, Howarth said he’s in a dilemma with the federal agency, and he insists it’s no chump change controversy.

“We are talking the IRS here,” he said.

In mid-November, Howarth received notice that his FICA account, even after an adjustment, was out of whack.

He owed the IRS a nickel. And the IRS was serious.

It advised him to act promptly “to avoid additional penalty and/or interest.”

Howarth started calculating how much that nickel was going to cost him.

As he figures it, there is the 5 cents plus the cost of a check — payment must be made by check or money order. Then there is his CPA’s fee, an envelope, his secretary’s time, his own time and a 42-cent stamp.

“The costs are several hundred percent over the nickel,” he said.

But then a second letter arrived. This one said Howarth had a refund coming.

The amount? Four cents. But to get it, Howarth would have to ask for it because it was less than $1.

“When I owe them a nickel, I must pay them,” he said. “It’s not optional. But when they owe me, I have to ask for it.”

Howarth said it is unclear from the letters what connection — if any — the 5-cent obligation has to the 4-cent refund.

He said he is unsure if he now owes one penny or if there was a recalculation resulting in a 9-cent swing in his favor.

“I just don’t know,” he said. “But I do know that if I were to walk into the IRS office with pennies taped to a piece of cardboard, they wouldn’t accept it.”

Howarth said he called the 800 telephone number on his letters, but gave up after “an inordinate amount of time on hold. And I’m sure the agent would have been delighted to have this file land on his desk.”

IRS spokesman Luis D. Garcia said the agency does not comment on individual accounts.

As for Howarth, he said he’s consulting his accountant — and he might try to follow the lead of Wall Street financiers in seeking a resolution, although he fears his Detroit address will work against him.

“I might apply for a bailout,” Howarth said. “But, for us, there seems to be some sort of stigma.”

Question – Why is the IRS threatening interest and penalties for less than a dollar? They could have sent a letter advising Mr. Howarth of the error and instructing him to make the adjustment on the following year, but they didn’t. On top of that, the IRS normally doesn’t play with amounts less than a dollar. Think about your income tax return, they only want whole dollars reported. So how in the world did this fiasco happen in the first place?

I ask these questions because these are the questions that you should be asking if a similar situation happens with you.

In all reality the IRS should be dissolved. The income tax needs to be replaced.

We’ve heard of the flat tax and we’ve heard of the Fair Tax, both -although not perfect – are a vast improvement over our current system. But with the Dems in power and BHO about to begin his Infestation of 1600 Pennsylvania Ave, I seriously doubt any significant changes to the tax code benefitting the American people will happen.

So keep in mind, this could happen to you.

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