The IRS

No, this isn’t about their war on conservatives. I got a shocking notice in the mail for my Subchapter S that said I owed three thousand dollars, even though there were no taxes due. It was a late-filing penalty. I had requested an extension in March, and filed in October, as I’d done for the past couple years, since I started the new company, and passed all the profit through to myself as sole owner. But they claimed that I hadn’t filed for the extension, so it was six months late (they counted the four days from when I mailed on October 15th as another month) and they charged me $195 per month times two, claiming that there were two shareholders, even though it was addressed to me as sole owner. I looked into my options, and while there are ways out for individuals, they’re a lot harder on S corps.

Fortunately, the woman I talked to on the phone was reasonable, and I managed to get her to accept that I had filed for the extension (she recognized that my actions would have made no sense if I hadn’t, and my past history was to do so), and convinced her that I was the only shareholder (which they should have known by looking at my K-1), so she knocked it down to two months from when I was supposed to file in September (yes, I did screw that up) for one shareholder, to get the bill down to $390. But it’s still annoying to be fined for a late filing in which no taxes were owed. Clearly, they want to be harsh on late filers regardless.

5 thoughts on “The IRS”

  1. I’ve had a few tax problems in my life, ranging from being unable to pay when I was dead broke to having our tax preparer leave a zero off of my ex’s withdrawal of $50,000 from her late mother’s IRA. Whenever I dealt with them on the phone, they were perfectly reasonable, nice, and helpful. Not so the California Franchise Tax Board. They’re bastards. But they are much more competent. Life is full of trade offs…

  2. I’ve found it hard to get them on the phone. Two years ago a job change caused a rollover which was reported. They didn’t believe me, so I got paper proof from the 401K and IRA administrators that the funds went directly between them in the allowed 60 day period and mailed that back to the IRS. Four months later I get notice that they reviewed it and I still owe the penalty. I sent the paper work back in with a nicely worded letter saying “prove it”. Two months later I got a letter back saying all is well.

    The IRS is one of the most broken agencies there is, and I hope one of the first that Trump will outsource, though I’d rather have a flat or VAT tax.

    1. Broken is what you get with a 70k+ page tax code.

      Personally, I’d like to see the whole of the federal legal code reworked to something that would fit a single printed volume.

  3. Serf is correct. We have the illusion of freedom just as we have the illusion of money. At any time, to suit it’s purpose, the govt. can change the rules.

    We form govt to protect us from other govt, but what protection do we have from our own? The legal system only protects you until it doesn’t.

    Used to be you could go where govt wasn’t. Not so much anymore.

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