This actually happened. Bear with me, it’s convoluted. Oh, and there is a multiple choice quiz at the end of this blog, so read carefully. Really.
I received the letter pictured below (SSN redacted) from the IRS. It claimed I owed them $112.19 due to an amended tax form I submitted for my 2012 taxes. As it happened, we received a late W-2 (wage and income form) after I had calculated and sent in my tax return (we were due a refund). It came from some school substituting jobs my wife did early in 2012 which we had forgotten about. I, being the good fiscal conservative that I am, immediately amended my 1040, which revealed that as a result, I was due $112.00 less in refund than I had originally calculated. Along with the amended return, I sent a check for $112.00 and a letter of explanation why I had amended my filing.
Fast forward to April 29th, the day I received this letter. Keep this date in mind, it’s important. The letter claimed I owed the $112, plus 19 cents as interest. Needless to say, I called the IRS (always a daunting experience). I had the cancelled check at the ready. After a 20 minute hold period I spoke to an IRS agent. I explained, she left the phone again for a few minutes, and returned to say yes, they had in fact received the money and all I owed now was the 19¢. As you will see from the cancelled check below (acct #s redacted), it was deposited on March 5th (again, an important date to remember). I asked why the 19¢? She responded, it was the late filing interest for the amount due (again, the $112) from the filing deadline of April 15 to the notice date of May 6th, 2013.
I asked why, if they received my money in early March, they are still charging me interest from April 15th to May 6th (which, if you have been paying attention, is still several days in the future). And how did I get something in the mail on 4/29 with a notice date of 5/6 in the first place?
Taking advantage of the fact that I was dumbfounded and speechless, the agent kindly suggested that I could go to the nearest IRS office (about 12 miles from here) to pay if I didn’t want to mail it in. So I did the math. To mail it: the cost of a check plus a 44¢ stamp, plus the 19¢ I didn’t really owe = approximately 65¢. Cost to go to the office: the 19¢ (I don’t really owe), plus $3.25 for gas (car gets 24 mpg -24 mile round trip-$3.25 per gallon) for a total of $3.44. If I choose the former, the post office and the IRS will use up x number of man hours delivering and processing the 19¢ payment. This, of course translates into a portion of each person’s salary which, hypothetically, is spendable income which will be put into the economic system with purchases. Those purchases will become someone else’s income who will make purchases, etc. etc. etc…… (this is your basic trickle-down economics). If I go with the office route, I will be contributing to the Gross National Product by using gas, creating man hours at the IRS office and further down the road, earlier than expected repair costs for my vehicle due to the mileage. Of course, this doesn’t even take into account the use of paper products and energy for computer usage which has to be manufactured by someone, right? By the time it plays out in the overall GNP it becomes a windfall.
After hearing this sad story, which would you choose?
1. Fight this terrible injustice with righteous indignation! No way they should get your 19¢. Yes, your name will go on a blacklist and you will henceforth be subjected to an excruciatingly meticulous tax audit every year for the rest of your life (and all your descendants for their entire lives), but it’s the principle of the thing.
2. Write a very friendly letter to the IRS explaining their
mistake oversight, and throw yourself on their mercy. Yes, you will still get audited for the rest of your life, but they will probably leave your descendants alone.
3. Mail them a check for 19¢ and enclose a copy of “Taxes for Dummies”. (May or may not result in audit, but probably).
4. Go to the local office to pay your 19¢, and ask them if they’re planning to take you to dinner and a movie first.
5. Happily mail in your 19¢, and feel good about yourself for doing your part in reducing the national debt.
6. Send them a check for $112.29, stating that they are the U.S. Government and could not have possibly been mistaken, and the additional 10¢ is for the interest accrued while you foolishly questioned their bill.
Thank you. Your opinion matters.