“Full of Feelings” Month: Fear and Frustration

Nothing makes me fearful like a letter from the IRS. It’s a different kind of fear. In my mind the IRS is a big office somewhere with a few tired people sitting at desks with large piles of paper. They are staring at the walls in a trance because there is no way for them to look at more than one paper each day, and they may not even get that far. I feel sorry for them.

At the same time, they have computers that randomly spit out scary letters to unsuspecting folks – none of whom are really trying to defraud the government by not paying their taxes.

This morning I opened that scary letter from the IRS.

It was a fearful time because I knew it would be like trying to reason with a big, lumbering giant who couldn’t read or hear me screaming. Once the giant thinks he is owed money he is deaf to evidence and arguments because my paperwork will be on the bottom of the pile on a desk in the big room with all the comatose workers. It may take two years before it gets read – two years of increasing penalties and interest on the money I never owed in the first place. I know all this from previous experience.

Supposedly I owe roughly (because I left the letter with my tax preparer and can’t remember the exact amount) $7,400, plus a $1,500 penalty for not paying this “substantial” amount, plus the interest on it for the last two years. It was from the 2019 tax year, which they are just getting to now. So, almost $10,000!

My tax preparer says not to worry. She already knows what the problem is. I hope she is right, but I’ve heard that from an accountant before – one who ended up as frustrated as I was after months of lost communications, numerous phone calls, and the hiring of a special representative to “walk” my paperwork through the big office and put it on top of someone’s pile. Before that whole thing got settled, the giant had withheld that year’s tax return and was garnishing my social security income.

It’s one thing to fear a system that works, but worse to fear a system that is pretty much broken. It’s like talking to a wall.

Bottom line: God is my provider and he knows what I need. Even if it were true, and I had to pay $10,000, I would probably survive. But it’s stressful fighting giants and I was hoping for a quiet year… just sayin’.

Retirement 101

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 I am not a financial expert. The whole subject of taxation confuses/bores me but I realize it is a necessary evil to know something about it. I write about it mainly to remember what has happened, but perhaps someone else can be spared some pain by reading of our experience.

If you are blessed with work during your life and have been able to put any of it into savings, there will come a time called retirement (age 72) when the government says you have to start using this money. You must take out a certain percentage of your savings every year, called an RMD or required minimum distribution. If you don’t get the hang of it the very first year, you are given a little mercy – if you apply for it. It’s almost a “given” and happens to people all the time. It happened to us. I think I’ve written about it already.

2016 was a year for mistakes. We missed the RMD by four days for one, and we also made a mistake in figuring what we owed. As a result the IRS punished us with a penalty –  50% of what our RMD would have been. When we discovered what had happened, we hired a CPA to submit an amended return for 2016. He also discovered our mistake which resulted in us being owed a return for that year. No one was alarmed at this point. It was expected that we would be forgiven the penalty for the RMD.

We started getting letters telling us to pay our penalty. They were counting the days we were “overdue” and charging interest on the debt. Twice over a period of several months our CPA called the IRS hotline, explained the situation and was told that since the amended return had been filed they would eventually get to it. We could ignore the letters. They said they put a hold on any further action and wouldn’t be bothering us about the matter.

But the letters didn’t stop, and the amount they said we owed kept climbing. Finally one day we got a notice that since we hadn’t paid, the IRS was going to start taking it out of our social security checks. Yes, they can do that. Once again, our CPA spent a couple of hours on the phone trying to find out why this was happening. The IRS couldn’t locate our amended return. One office had sent it to another and in between, it disappeared. It was resubmitted immediately and once again we were assured that any action against us would be put on hold. Nevertheless, money was taken out of the husband’s SSI check that month.

Our CPA had decided to get an extension for our 2017 taxes. He reasoned that we should get 2016 out of the way first, especially since the IRS didn’t seem to be getting the message that we didn’t owe them anything. We were due a return for 2017 and he was afraid they would take it. By this time, he had gotten a tax advocate for us – a person who almost walks your return from office to office until it is resolved and no longer a problem. His extensive conversation with the IRS gave him assurance that it would be okay to file for 2017. There would be no action to take the return we were owed.

Today we got a letter saying they took our 2017 return and applied it to our “debt”. It’s beginning to seem like the only sure thing is that they WILL DO everything they say they WON’T DO.  I feel like my favorite government agency has me on a hit list. In their defense, I have heard that they have had severe budget cuts and have way too few employees. But how is this ever to be solved? We pay a lot of tax – it’s not like we are paying less than we owe.

I’m just saying, if this ever gets straightened out, I’m throwing a party. #frustratedtaxpayer