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IRS responsible for haphazard enforcement of complicated code

Letter to the MBJ

Dear Joe:

I read your column in the June 1 edition of MBJ. Overall, I agree with the gist of your column, particularly your observation that it is Congress and not the IRS who is responsible for the enormous tax burden on the citizenry. However, I must take exception in particular to one statement made in that column: “…if you pay the tax you owe when it’s due, you will not have any direct contact with the IRS.”

Joe, I must say I am rather surprised that you, of all people, would make a statement like that. Has it been that long since you practiced? You should know that the IRS makes contact with all sorts of people who, as you as you say “pay the tax you owe when it’s due.” I can cite case after case where taxpayers have fully complied with all filing and paying requirements, only to have the IRS contact them to inform them something they have done is wrong. Sometimes, it’s something as simple as the IRS having lost track of a payment, or having credited it to the wrong tax period or tax ID number. In these cases, a letter of explanation along with copies of pertinent documentation usually clears up the matter. Since the IRS inquiry is usually written in “bureaucratese,” the taxpayer is sometimes unable to do this for himself and is forced to fork over a few hundred dollars to his CPA to clear the matter up.

Other cases are not so easy. For example, take a case I handled a year or two ago. The client, a wage earner with three dependents, filed his return properly, only to have the IRS challenge his dependency exemptions. This was one of the infamous “mail order” audits, where the audit is conducted by correspondence. True, there was a complicating factor in his return — his temporary separation from his spouse and their filing status, but the bottom line was that his return was prepared properly.

This gentleman tried to the best of his ability to settle the matter on his own, but after many fruitless months, the IRS slapped him with adjustments for two years of returns totaling about $4,500 in additional taxes, plus penalty and interest which brought the total to almost $8,000. Next was a wage levy, which nearly devastated him financially. He came to me, after being referred by another client of mine. I was able to get PRO to suspend the levy on hardship grounds, get the Examination Division to re-open the case (because he did not exercise his appeal rights), and I ultimately prevailed in full, even though there were some deficiencies in documentation.

Bottom line — taxpayer paid what he owed, when he owed it, but he went through a year and a half of hell and it cost him $1,800 in CPA fees to get the matter straightened out. The IRS is not responsible for the high taxes or the complicated tax code, but they are very responsible for the haphazard way in which they administer it and the abusive actions taken by some individuals who work for them.

Okay, point made. Now on to some less “taxing” matters. Heard you some time ago on the Matt Friedeman Show. You were very entertaining with your responses.

I’ve always enjoyed interacting with you, Joe. You are a very interesting person. I always enjoyed your “war stories” from my days at Jones & Collins. I think you’re doing a great job with MBJ.

Hope it’s making you a lot of money!

Steve Kean

Kean & Company Ltd.

Jackson

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