Wednesday, April 3, 2013

Me 'n Uncle Sam: I Fought the Law

You're a grand old flag, you're a high-flying flag, and forever in peace may you wave. Okay, I admit to falling short of Jack Armstrong, the All-American Boy, but I try.
Or, more to the point, I have tried, past and pluperfect. I'm running out of scenes, and though the final curtain hasn't fallen, I can tell its stage hand is thinking about it. Maybe it's the AARP junk mail that's been showing up.

My first real encounter with my government occurred when the President of the United States sent me Greetings, on the occasion of my eighteenth birthday. Suffice it to say that a birthday Greetings from Lyndon Johnson was suspicious, to say the least, even though all eighteen-year-old males in those days knew these letters wold be coming. 

More on this at another time. Getting drafted, or the threat thereof, was no small matter.

But then, neither is an IRS audit for 2010, my second in two years, which has come to an end, or so it's reported.

It's been going on for more than a year. Let me state at the outset that the whole catastrophe was my fault.

Something happened with my computer that caused file path/save errors. I have no idea what happened, but one day, all my documents disappeared. After a lot of trial and error stuff, they came back, but I noticed that some of the data in some of my files, including Quicken, was gone. 

The disappeared data had no consistency. Some transactions in some files were gone, while their counterparts in other files were intact. To learn what data had been zapped, I would have had to review each and every transaction in multiple programs and files, including a sentence-by-sentence read in all of my Word files and a transaction-by-transaction review in Quicken, Quickbooks and Excel.

Through all this, I'd been working on my tax return with Turbo Tax. It all took a long time, since I tend to check and double-check entries. In any event, the return I filed with the IRS was not the return I thought I'd saved. When I received the Notice of Deficiency and looked at the return I actually filed versus the one I'd saved in pdf, I was really stunned.

In the course of adjustments to our retirement account, Wells Fargo sold some securities and bought some others (this makes it sound like a Donald Trumpish thing, which it isn't; we're very middle class and have managed to save something over the years, but nowhere near as much as we should have). However, the gross sales were reported to the IRS, but with no cost basis, which was the part that didn't get saved.

The IRS thought--reasonably--that I underreported thousands of dollars that I never imagined we even had, and would we please send a check for, as I recall, $20,000.

Right. And the Pope's a Jew.

No problem, I thought. I'll just file an amended return. I did, and because of some expenses and deductions I'd neglected to claim, the amended return requested a refund of $800 or so.

It was bound to get someone's attention.

The way this stuff works is that you never communicate with the same person more than once. Moreover, the IRS gives you a phone number, but it's the kind that you know is Voice Mail Purgatory. Besides, I like keeping a paper trail with any Nameless Man who has all my stuff from time immemorial, including the time when Someone in Authority told me that my fingerprints were on file with the FBI (this really happened to many of us of a certain generation and proclivity).

The effect was to drag the audit on and on. And on. And on.

However, I had received a formal Notice of Deficiency. This document has legal protocols and deadlines that make a typical You-payup Notice from the IRS look like Yo Gabba Gabba. I had to file a reply to formal Notice with the Tax Court, as in a formal case filing called "The United States vs. William Metzker." This is very scary.

Compounding things was that by the time all this shit came to a head, we sold our Hillsboro home in less than three weeks and moved to an apartment for three months, subsequently moving to a Denver Metro corporate apartment for a month, and then to our new home. Three moves, three different contact info places and, despite my best efforts, records and documents scattered all over the place.

The IRS demanded I prove stuff, and I couldn't find, much less provide, all the records, save those for the securities sales--which amounted to 99.5% of the claim against me.

Short story long: Two days ago, the Ogden, UT (scary in its own right) IRS guy called and, first off, conceded the big banana claim, but went on to challenge all my business expenses. "How do I have any way of knowing if a charge to, say, Realtytrac is dues or marketing?" he said, forcefully.

Who cares, thought I, but let him play his script. Note: I charged as many business expenses as I could to my credit cards, for rebate reasons, and had to send the IRS all my credit card and checking account statements.

"I've talked to our attorney in this matter," the guy said, "and if you want to claim all this stuff, you're gonna have to go to tax court."

Right. I'm going to go to court for, maybe, $800, with missing records, and a $400-per-hour tax lawyer. This did not compute. "Make me an offer," says I, claiming a lack of resources.

The IRS had already waived the entire $20k claim against me, he said, but it looked to him like I could still owe, maybe, $18 or $20. But he might see his way through to waiving that if I'd sign documents which, in essence, forgot the whole thing. Would I sign?

Excuse me, is the Pope a Catholic?

I do have to say this: With the exception of the latest guy I had, I have always found the IRS to be enormously respectful and patient. It gets a bad rap, unfairly, in my view. Staffers tend to be very well educated and vetted for keeping professionalism in the face of idiocy.

Still, my battle had gone on for thirteen months. Proof of my position, in the form of brokerage statements and 1099 copies, were provided early on, yet the whole thing persisted, wasting not so much my time, but the time and effort of some very talented IRS employees.

But still, all's well that end's week, I guess.

Next post: My father's near-bankruptcy over tax issues.

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