The IRS - Making a Check and Listing It Twice

[MineralMan]

A mystery check showed up in today's mail, from the United States Treasury. I will skip saying what the amount was. My wife showed it to me and said, "What is this about?" I looked at the check and the amount it was for and said, "I have no idea, but let me think about it."

A few minutes later, I had solved the mystery:

As is our wont, we had filed an extension on filing our 2018 taxes. We almost obsessively procrastinate. In October, I finally got around to doing our taxes, using TurboTax, about which I won't say mean things, although I could.

Anyhow, when all was calculated, we owed some money to the IRS. Ever the honest taxpayers that we are, I E-filed the tax return and electronically paid the amount owed, letting TurboTax handle the payment, which went through just fine and was taken from our checking account, faster than the time needed for light to travel six feet.

Then, in November, we got a nice threatening letter from the IRS saying that we had underpaid our taxes and that we must pay up at once or face dire consequences sometime in the future. Again, ever the honest taxpayer, I wrote a check for the amount of money the IRS demanded, paying little attention to the exact amount, since there were numbers, etc. on the threatening letter that showed how much we owed. I mailed the check the same day. In my haste, though, I forgot to check that amount against any other numbers associated with that tax return. The funds were gone from our checking account forthwith, proving that the USPS delivers quickly to the IRS.

The upshot is that the IRS somehow did not notice that we had electronically paid the amount owed when we filed our 1040. Apparently, there is not good communication between the IRS and the United States Treasury, which was the recipient of our electronic payment. Someone or some algorithm at the IRS had billed us again for the amount we had paid electronically when we E-filed our tax forms.

In its thorough and exacting way, the IRS noticed our double payment and a check was cut to refund us the amount we had paid twice. That's not a very efficient way of doing things, but we got our money back.

As I thought more about this, it occurred to me that, had I noticed that the amount demanded in that earlier letter was the same as the amount we had paid electronically, I might have written back to the IRS explaining the situation. I have done that in the past, when a mistake was made by the IRS. It is not a good idea, since there are apparently no human beings with full use of their brains employed at the IRS. Rather than clearing up a discrepancy, such letters of explanation lead to more letters of demand from the IRS, but not to a positive outcome in any reasonable amount of time.

So, perhaps I did the right thing, unwittingly, by paying the amount owed when we initially filed the 1040 twice. Rather than involve a human being, the problem was corrected automatically by the algorithms that connect the IRS to the United States Treasury and that reconcile discrepancies.

I will, however, offer a bit of advice, based on a very difficult time in a previous year in correcting an error made by the IRS: If you send a check to the IRS, either with your tax forms or following a demand for additional payment of some amount, do not EVER forget to write the Social Security number of the first person's name listed on the tax form or the demand on the memo line of the check, along with the year and form or voucher number. If you fail to write those numbers on your check, the check will be cashed, and it will take you at least a year, or perhaps several, to convince the IRS that you, indeed, paid that amount. Trust me. It is always better not to deal with the human beings at the IRS. They are not the best and brightest of federal employees.

Now, if you read this entire post, you are truly a dedicated and patient DUer. I thank you for your diligence.

[SWBTATTReg]

1. Well written. Dealing w/ the IRS is an iffy situation, and like you, I don't trust them ...

either, and always, always copied everything I do with the IRS. I also always send stuff to the IRS certified and return receipt requested. We (or me actually, being an accountant) have a rule that if the IRS demands a really mundane amount of money ($10, $20, etc. small amount of money), pay it.

It's not worth the hassle of dealing w/ them and sometimes, they (IRS) actually do catch stuff that you might have overlooked (I overlooked small payments I've made to the IRS, they've caught), and rebated me the money back.

Thanks for the story.

[MineralMan]

3. Thanks.

You're right. If the IRS sends you a letter saying you owe something, the simplest thing to do is to send them a check. Normally, that is the end of it.

However, if the amount is substantial (substantial being variable for different people), some research should be done. An example is if your spouse, for example (no names mentioned) forgot to put a social security number and form number on the check she sent with the previous forms. Then, if you truly do not owe any money, it is worthwhile to obtain a copy of the cancelled check, as cashed by the US Treasury, and write a simple, clear letter explaining the omission. Eventually, that will clear things up, but it can take some considerable time.

Fortunately, the IRS, despite its dire warnings, does not act quickly, ever, except in cashing checks you send it. In one case, where that social security number was left off the check in question, it took three years and a number of letters, each with a copy of the cancelled check, before the IRS stopped demanding the money.

It was much faster this time, actually, to pay the amount twice and let the computer find the double payment and issue a refund. The amount, however, was only in the low three digits, so it wasn't that substantial.

On the other hand, one time I received an income tax refund from the State of California for more than my actual taxes amounted to. After looking at the calculations the state included with the refund, it was clear that someone had mistyped a number from the tax return when entering the return into the computer. I could see exactly what the error was.

I called the number listed in the mailing and attempted to explain what had happened to the nice person who took my call. He seemed not to understand what I was talking about, and did not offer any useful suggestions for what I should do with the overpayment in the check. The state actually owed me nothing at all.

I weighed what to do for some time. Now, I could have used the roughly $2500 that check wanted to pay me, but did not deserve it. I reasoned that someday, when i did not have $2500, the state would recognize its error and demand the money back. However, the human being I talked to offered no solution, and I knew, from experience that sending the check back with an explanation would probably just lead to additional hassle. So, I stuck the check to the wall of my office with a push pin and just let it hang there.

I never got a request for its return. I never deposited it. I finally threw it away 10 years later. Trying to correct an error with a government agency is almost always a waste of time.

And then there was the time when the sales tax department audited me in a visit from a tax auditor. How that ended is a story worth telling, but I'll save it for another day.

[SWBTATTReg]

7. It is amazing that $2500 just disappeared (pinned on your wallboard) and then thrown ...

away by you. You would think that they would have done an internal audit and caught this, but hey, we're dealing w/ government red tape. Now I am not knocking the people who work for the government, it's just that the red tape and stuff is ridiculous and verges on the pathetic.

I know a lot of people who work for the IRS here in STLMO (we have an IRS center here), and they are good people. A lot of them are just bidding their time and will flee as soon as they can. It's just the sheer size of the IRS and red tape surrounding the agency. Perhaps a fine example of government too big, eh?

[jberryhill]

2. It's surprising, though, how often these things can be cleared up with a phone call

The right hand and the left hand aren’t always in good communication at the IRS. Maybe I just get lucky, but these kinds of problems can often be resolved with a phone call (provided you request a follow up by mail).

[MineralMan]

5. Sadly, that has not been my experience at all.

Upthread, I mentioned a sales tax audit I once experienced, which sort of illustrates my point:

I used to sell mineral specimens to collectors from a website. It was a nice little business and was connected to my hobby of mineral collecting. 95% of my sales went to addresses in states other than my own or to other countries. At the time, those sales were not subject to California sales tax. When I made a sale to someone in Califiornia, I noted that and filed the required form annually and paid the sales tax. I never charged the sales tax, and just paid the percentage on the total invoice amount. In a year, the taxes i paid amounted to less than $200, so it wasn't worth bothering doing the more complicated calculation.

At one point, I moved my business into a small office suite, built display cases and called the place a mineral museum. I hosted classes from the local schools and did a nice lecture on the importance of minerals. Occasionally, but rarely, someone found their way to my offices and bought a specimen or two. I kept records of those sales, as well, in my little receipt box.

At the end of the year, I added up all the California sales and paid the sales taxes I owed.

Then, one year, i got a letter from the State Board of Equalization, telling me that i would be audited and that a sales tax auditor would come to my location to conduct the audit. I called and explained my business and told them that my most recent sales tax filing was accurate and did not amount to enough to warrant an audit. Nope, they said. The auditor will be there on such and such a date, and that I was to have my books ready. Books? I did not do bookkeeping. I had an Excel spreadsheet where I entered each sale. In each record was the location of the customer. I even entered those few local walk-in sales. Then, I could sort the spreadsheet by state and know exactly how much I had sold within my state.

Anyhow, the auditor came. I showed him around my little "museum" i showed him my box of invoices and receipts, and handed him a printout of Excel spreadsheet sorted by state (or country). I had even printed a separate report showing sales in California with the totals.

It was a tiny little business. In a year's time, I make about 500 sales in total. In California, I made about 40 sales, by mail or in my office. I explained to the auditor that I didn't keep regular books and explained that I paid the tax percentage on California sales on the total amount charged to the customer, which was more than I had to, but simpler.

The auditor guy just laughed and said he wouldn't be bothering me any further, and asked where a good place for lunch might be.

Government tax agencies don't understand my kind of businesses. They just don't. The individual auditor does, though.

[SWBTATTReg]

8. Nice. Being upfront and honest goes a long way. Neat story too. Nothing like being simple...

in keeping track of stuff, and not over complicating stuff. Neat story too. Thanks for sharing.

[MineralMan]

9. My bookkeeping method follows the shoebox strategy.

Well, except for the Excel spreadsheet and the detailed invoices for every sale shipped by mail. Those went into the shoebox.

I've always kept my small businesses small and simple. I suppose I could have handed the auditor the box of invoices (and receipts for sales made in my office), but he instantly recognized that there was nothing to be gained by his going through that stuff. The spreadsheet was all he needed to see.

I used to have a small shareware software company, as well, again operating strictly by mail and online. It ran the same way, and generated about the same small income each year. More of a hobby than a business, although it generated about $30k in profits a year for a few years. But, there was nothing complicated about it. I did everything myself, from writing the code and printing manuals to copying disks and shipping off the products. Every transaction had a paper invoice generated by another piece of my own software. So, the records were always available, but there were few enough transactions that it was easy to deal with at the end of the year.

I'd hate to have a more complicated business, frankly. I just don't have the patience for it.

Now, I'm semi-retired. I have one client, who pays me a retainer each month plus a per-project flat fee we agree on. So, I have on 1099 to deal with and pretty much zero business expenses. Makes for very simple tax returns.

[Beartracks]

4. Bravo for your OP title!

============

[MineralMan]

6. Aw, thanks!

[marlakay]

10. I smile, I use to be a bookkeeper

So do my own taxes. You can laugh but I refuse to use them as a savings plan and figure out and save exactly what I think we will owe and have our retirement take out that amount each month. Its a game for me to come within $100 either way and I am usually right. Silly I know.

The last error I made was on my state OR tax being unfamiliar since we have only been here 2 years. Last year I put in medical expenses and accidentally gave me the same deduction as my husband. He is over 65 and I am not.

So I owed a bit more not much. They sent message I pay online super easy.

And yes I always put SS on check. But haven’t had to pay in years, usually a small amount back they put in my account no check. I do my taxes online through the IRS site. Basically it just does math you still have to know what you are doing.

[MineralMan]

12. My wife and I are self-employed and always have been.

Well, I have been since 1974, but my wife has been since 1991, when we got married. Being self-employed always means you're operating from incoming check to incoming check, it seems. Our income is always variable, to some degree or another. I do not think we have ever had a year where we did not owe something to the IRS. That's why we're always filing an extension. I do our taxes in early April, so we'll know how much we're behind and can accumulate that by October. Our estimated tax payments are somewhat spotty and never enough. So, there's a minor penalty to pay each year.

It's how we live. It's awkward sometimes, but there it is. Applying for things like mortgages is always a major hassle, since our income is so variable. The last time, I think we had to submit five years of tax records.

Now, we're both on Social Security, but we still are self-employed, and still making an unknown amount of money each year. Complicated stuff, but we're used to dealing with it.

[csziggy]

11. And NEVER try to fuck with the IRS's view of the world

Back in 1977 when my husband and I got married, not only did I not take his surname, I filled out the paperwork listing me as head of household since I had the most income. The idiot accountants who did the actual filings switched our names on the premise that a married woman cannot be head of household - something I still find objectionable.

What we didn't notice when we mailed off the forms and the check to the IRS was that the idiot accounts did NOT switch our social security numbers. So a little while later, we got a letter from the IRS saying that the SS #s were wrong - as you said, "there are apparently no human beings with full use of their brains employed at the IRS." We filled out the form they sent, putting the SS#s in the correct slots.

Then I got a letter from the Social Security Administration, asking why I had not notified them of my name change. It seems the IRS took C. S. Ziggy and husband Name Notziggy to mean that my name was now C. S. Notziggy - even though the names were fully spelled out on separate lines - and they told the SSA that it had changed. I wrote the SSA and told them I had NOT changed my name and it was (and still is) the name I was given at birth and would not be changing.

Forty fucking years and I am still having that argument with government officials. My name is the same as it always has been. The only thing that was simpler was getting my passport - though I did supply a copy of our marriage certificate, the passport people got my name right the first time around.

Oh, the idiot accountant firm only did our taxes that one year. The accoutant that I used for over twenty years and the one that "inherited" my business when he retired have always gotten things correct. They even know to send the bills to me and not to my husband.

[MineralMan]

13. Like you, my wife retained her orginal name, but we

have always been careful with that. It's amazing to me that such things can cause problems, but they do. When asked why my wife's last name is different from mine (a surprisingly frequent question), we just say, "Why would she change her name. It's her name."

I do understand the issue with getting the order right on tax forms. We've always been very, very careful about that. Driver's licenses and passports, though, haven't ever been an issue. So many couples are like us, though, these days that the problem seems to be dying down.

[csziggy]

14. I just don't understand why a man has to be head of household

I make most of the decisions in our house - which I paid for - and I have always had the most income. The property is solely in my name. So why, just because he was born male should my husband be head of household by default?

I still object to this position by the IRS, but I got tired of fighting with them about it.

Maybe in my next lifetime I will fight the IRS again and win.

[MineralMan]

15. I wasn't aware of that, actually.

I guess it has never come up for us.

[csziggy]

16. The original IRS forms listed the first position that way, if I remember correctly

I'd have to go to our storage unit to check, but either they listed the first person on a joint return as "Head of Household" or their instructions said to put it that way. I took offense and as a dedicated women's libber, I tried to make a point, but I lost and ran out of energy to keep fighting them. Being audited four years in a row (with no changes in the IRS's favor) tends to wear you down!

We could have filed separately, but for various reasons never have. At this point, it is not worth it. We'll only have to file for another thirty years or so...

[marlakay]

18. I have done our bills since the

Beginning for 20 years but all credit cards and other things I had to get permission from him to talk about account. Few years ago I took the time to call each one with husband at my side to make me the person to talk to.

I am not the one who made the most money but in this day and age can’t we at least be equal?

My husband is terrible with money and was in debt when I met him. I paid off all his debts when we married with savings and he added me to his house and deal was I did all finance in our marriage.

He tells everyone we retired early and have done well because of me. Makes me feel good.

[csziggy]

19. We've had two credit card accounts that would only talk to my husband

Those two cards have gone in the cabinet. We didn't close the accounts since that supposedly hurts a credit score, but we simply don't use those cards. One has been through at least four new cards sent out - I never even activate them. The other just this year pissed me off - when I called to let them know we'd be traveling to the UK, they would not take the info from me but had to talk to my husband. That card did not go to the UK with us, so they cost themselves a LOT of money by ebing obnoxious.

I make the money, I do the accounts, and I am the one that makes sure bills get paid. If they won't talk to me, they won't get our business.

[marlakay]

20. I thought so to about score

But those credit cards give high credit amounts to us and holding a lot of open credit can pull it down.

I closed one per year of the few I didn’t like and only a short time later score rose from 750 to 850 as I closed two with high credit even though zero balance on them.

I spent the summer in Ireland this year 3 months alone and took the Costco Visa. Worked great.
I only had one problem when using to pay ahead for bus, normally at home visa would just send me security text, but my phone was off for the summer, I got Irish sim card. It took my back up Amazon card.

[csziggy]

21. Once a few things shake out, I may close some of the accounts

But my life has been too chaotic for the last 19 years to do more than keep ahead of things.

One good thing to consider about making sure the credit accounts are in both of the spouse names is if one dies. Mom never had her own account, since she didn't work outside of the family since the 1960s. When Dad died, my sister tried to transfer the cards Dad had held to Mom - no go. The credit companies just wanted to close the accounts. At 92, Mom was not going to be able to establish her own line of credit.

[MichMan]

17. Are you planning on cashing it?

[MineralMan]

23. Sure. It will get deposited tomorrow.

[lastlib]

22. As a former IRS employee, I can attest.....

that "there are apparently no human beings with full use of their brains employed at the IRS." I left that agency BECAUSE of the idiocies I encountered. That organization is truly hopelessly dysfunctional. Finding a one-million-dollar check on the floor(!) was an early clue for me. A co-worker of mine got fired because she returned someone's mortgage payment check which they had sent to the IRS in error, instead of stamping "IRS" over the payee's name and cashing it (which would not have even been credited to that someone's account b/c their SSN wasn't on the check).

[MineralMan]

24. Many years ago, I had to set up a payment plan with the IRS.

We had earned a bunch of money one year from a contract that was unexpected, and didn't set aside enough of it for taxes. So, we set up a payment plan to pay off the IRS. It was all paid off in six months. What we didn't know was that the IRS doesn't release the lien automatically and record the release once the amount is paid off. You have to specifically request that the lien be released.

Jump ahead several years, and we were refinancing our mortgage. A week before the closing of the refi, I was informed by the lender that it would not close due to that outstanding IRS lien. I asked them to put the closing off a month, and I would get the lien cleared.

Well, that was an adventure. I did what was required and sent the forms and copies of every cancelled check, and mailed it to the address I had been given for the IRS lien office in Fresno, CA that handled such requests. I got mail back saying the request was being processed, and then nothing after that. A couple of weeks before the refi was to close, I still had not gotten any word on this.

So, after considerable research, I found a phone number for that Fresno office and called. A pleasant-sounding woman answered and I explained my situation. She said she'd call back. She did, a couple of hours later. "I have your application here, but it won't be processed for another couple of weeks. Clearly, though, you have satisfied the lien conditions."

I thought quickly, and damped down my growing anger about this whole thing. I shifted into my appeasement mode, thanked her profusely for her help, and asked if there wasn't some way to move my application up in the pile, since much was riding on the clearance of that lien. I put as big a smile in my voice as I was capable of. It worked. She said, "Well, yes, I could do that for you. But, the release of the lien still has to be recorded at your County Clerk's office."

I wondered aloud if she could possibly arrange to fax the lien release to the County Clerk's office. She responded that, yes, she could, but didn't have the fax number. But I had the fax number, so I gave it to her. The IRS woman said, "Well, then I'll expedite the process for you and get that lien release faxed to that number today. " I thanked her profusely, but did ask for her desk phone extension number, which she gave me.

Then, I called the County Clerk's office and talked to a person there I had dealt with already. I alerted that person that a lien release from the IRS would soon be faxed to their office and asked if they could record it immediately and fax a copy of it to the lender, and a copy to my fax machine. Once again, I was in my most sincerely friendly mode of conversation. "Sure, I can do that for you. I'll watch for that fax."

And sure enough, later that day, I got the lien release document faxed to me by the County Clerk's office, with a note saying that it had been faxed to the lender, as well. I called the lender's representative to alert him about the fax. He checked. It had come in. The refi closed as scheduled.

But, here's the thing: That lien release should have been issued and recorded as soon as I had satisfied the terms of the lien by paying off the amount as agreed. That the IRS doesn't do that automatically is really shocking. I wonder how many times a home sale or refi has fallen through because an old IRS lien had not been released. I was able to maneuver through the bureaucracy successfully, but many people would not have been able to do that.