This Never Happens
About two months ago, I got a fat envelope from the IRS saying, in about twelve pages of specific and boilerplate text, that we owed around $3500.00 in taxes from last year. Yikes!
Apparently, it appeared to them I had failed to report investment income from stocks I inherited when my mom died. I was pretty sure that wasn’t the case, though. One of the sage pieces of advice my dad gave me was never to fudge on the amount of money you make in a year; the implication, though he didn’t say this exactly, was that one can get a bit creative in reporting expenses, especially since, in some cases, it’s a matter of interpretation about what exactly counts as business costs; the IRS, though, is very good at tracking how much a person earns, so not only is it morally suspect to under-report, it’s imprudent, as well.
Amazingly, I was able to find the appropriate records, reconstruct my error in the way I reported the investment income—I had reported it, just not in the same way that my broker did to the feds—and write a letter to the IRS explaining what had happened.
A couple weeks ago, I got a follow-up letter saying that they had received my correspondence and were reviewing it. I had, at that point, visions of bureaucrats in windowless offices taking umbrage at my impertinence in not merely sending off a check; I imagined I’d get a spiteful reply saying I owed twice as much originally.
But lo and behold, today, I got a skinny envelope with one sheet of paper in it that informed me that the Department of the Treasury is pleased to tell me that the difference between my records and my payers’ has been cleared up and that I may disregard any previous notice of deficiency. I am thanked for my cooperation, end of story.
Score one for the common man, at least so far.
Apparently, it appeared to them I had failed to report investment income from stocks I inherited when my mom died. I was pretty sure that wasn’t the case, though. One of the sage pieces of advice my dad gave me was never to fudge on the amount of money you make in a year; the implication, though he didn’t say this exactly, was that one can get a bit creative in reporting expenses, especially since, in some cases, it’s a matter of interpretation about what exactly counts as business costs; the IRS, though, is very good at tracking how much a person earns, so not only is it morally suspect to under-report, it’s imprudent, as well.
Amazingly, I was able to find the appropriate records, reconstruct my error in the way I reported the investment income—I had reported it, just not in the same way that my broker did to the feds—and write a letter to the IRS explaining what had happened.
A couple weeks ago, I got a follow-up letter saying that they had received my correspondence and were reviewing it. I had, at that point, visions of bureaucrats in windowless offices taking umbrage at my impertinence in not merely sending off a check; I imagined I’d get a spiteful reply saying I owed twice as much originally.
But lo and behold, today, I got a skinny envelope with one sheet of paper in it that informed me that the Department of the Treasury is pleased to tell me that the difference between my records and my payers’ has been cleared up and that I may disregard any previous notice of deficiency. I am thanked for my cooperation, end of story.
Score one for the common man, at least so far.
posted by Professor Dave at 7:49 PM
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