I would like to point out that the United States government, through its collection agency, is proving to have that incredible combination of malice, inconsistency, and incompetence that makes for the worst kind of authority. Their stupidity has now cost me money and is likely to cost me more that I don't really owe, just to make them go away.
In a nutshell:
1) I got a return for tax year 2020, but huge bill for 2021. Hmm... what changed between 2020 and 2021? Note that my wife was unemployed a good hunk of 2021 but was not collecting unemployment insurance or any other compensation in that time. We figured we'd be getting a return again, but no. In fact, with the money we'd paid out for various emergencies at the end of 2020, we were unable to pay the tax in a lump.
2) When my accountant filed my taxes, he instituted an easy payment plan that the IRS will allow. You can pay whatever you are able per month, as long as it's paid up in a reasonable time. Downside: It requires a processing fee of $225. When you file your taxes, he told me, the IRS reviews the application and lets you know in 30 days if it accepts the plan.
3) So I waited to hear whether plan was accepted. I waited through April and May and most of June.
4) In mid June I received bill from the IRS with penalties and fees and threats, demanding the whole amount. I sent an anxious text to my accountant, who failed to get back to me for a couple of days, so I texted him again. He assured me I must have misread the letter, so I emailed him a copy. Then he told me he could not help, because maybe the IRS screwed up, but he is not allowed to discuss my return with them. I thought the main point of having a CPA do your taxes was to have someone to act as an interlocutor with the IRS if things went sideways, but apparently not.
5) I tried to deal with it by phone, but could not get through to the IRS. I'm sure my call is very important to them, but after spending almost an hour running into telephone trees like George of the Jungle, I decided to try the online contact option. Isn't that always easier? If you want help from Amazon (for example), you're much better off contacting them by email.
6) BUT, to deal with the IRS online, I had to prove my identity with driver's license, birth certificate or passport, Social Security card, a phone bill with current address--at least two serious forms of ID and one not-so-serious. All this to access ID.me system that they use, in a country where requiring an ID to vote is considered the equivalent of murder. I mean, I appreciate the IRS trying to keep scammers from getting my information, but I had trouble finding my birth certificate and my passport has expired. When I finally got it all scanned in, entered, and done, I had to wait for a video callback on my computer. Wait time was almost two hours. I hung around working for an hour and change, but had to take the junior dog out to pee (40 minutes left on the clock). We were outside for five minutes, and when I came back the call had bailed for "unknown" reasons.
7) Back to the phone! I tried to call and after half an hour of weeding through branches got thrown off phone tree for call volume. How about that.
8) And I just gave up. I called the banker and arranged to have money removed from my piddling IRA to pay the bill. Four days later it was set, and I paid the IRS online immediately (that didn't require proof of identity). I didn't even try to fight the penalty and interest charges at that point. I was afraid they'd keep rolling up the charges and ruin our credit rating.
9) Two days later I got a letter from the IRS that claimed to contain a payment voucher (although it says nothing about how much to pay or how much is owed) and/or an inquiry voucher (to mail in if I have a question, because it's 1920, I guess). I have no idea if this means that they have now approved the payment plan although I just paid off the balance in full. However, it may mean that even though I have just paid it all off, the IRS may think I also owe them the $225 fee for the payment plan I did not use. I would bet that whole $225 that I will get a bill from the IRS for $225.
The IRS is like some kind of pagan god. It is inscrutable, it has a bad reputation, it may be appeased with massive sacrifices but it may not accept them as adequate anyway, and it can easily destroy a human being -- or at least a middle-class sucker with no resources to fight them--and that's when it's just being stupid, not actively evil.
A sane country would have adopted a flat-tax plan, which would require a simple form and probably 1/100th of the employees, but that would leave no room for graft and political favors. The Internal Revenue "Service" should be abolished, the empty buildings destroyed, and the grown sown with salt so nothing can ever grow there again.
Simplify government style: We take all your money and then we'll decide how much you can have back. easy, peasy.
ReplyDeleteI have a pretty good perspective on internal IRS operations (particularly as regards their IT systems).
ReplyDeleteCovid was a huge challenge for them. Many IRS employees were able to shift to telework, but handling paper submissions still required people at processing centers to manage that workload. During govt lockdowns, the backlog of unprocessed paper grew to tens of millions of documents. It will be many months, perhaps years before they work through all of it. 90% of submissions are electronic, but that still leaves tens of millions of pages of paper submissions each year they have to deal with.
Meanwhile, Congress continued to pile new requirements and changes to the tax code onto the IRS (e.g., handing out Biden's inflationary covid checks to millions of Americans). It is all they can do with given resources to program the new systems and code changes in time for tax season, then do all the tax season processing and post-processing and by then it's time to start programming and testing the next set of changes that Congress passes.
All of these problems would vanish like magic if Congress passed some kind of tax simplification, like a flat tax. But that would take away their ability to carve out exceptions and create rules that favor their constituencies, i.e., the Wall Street and Big Tech donor classes.
The tax system is so complex that if you have a challenging question and you ask three tax experts on how to deal with it, you'll get four different answers. On top of that, if you ask the IRS what to do, and you do exactly what they tell you to do, that is no defense if later they determine that you did it wrong. You can't rely on the IRS for advice on how to file your taxes.
Bottom line advice is to avoid communicating with the IRS by mail if at all possible.