Thursday, November 5, 2009

All Rangel-ed Up

Rarely does a single piece of mail cause one's heart to flutter, face to flush and knees to buckle.

But, then again, rarely does a piece of mail arrive with the dreaded return address:

Department of the Treasury
Internal Revenue Service


That's the "Welcome Home" that greeted me this past Tuesday as I dragged myself through the front door after a rough day of earning a living, playing golf and ferrying adolescent infants from one suburban soiree to another. Imagine my surprise when I discovered that I owed our esteemed and infallible federal government... $11,589.22!

Holy smoke. What did I do this time?

Now look, I'm not the Secretary of the Treasury.

I'm not the chairman of the Federal Reserve.

I'm not a New York Times columnist who also consulted for Enron.

I'm not even a graduate of the Harvard Business School, a Fortune 500 CEO, a wheeler dealer in foreign exchange arbitrage or the chairman of the House Ways & Means Committee.

The tax code, for me, is not all that complicated.

I don't have income from esoteric foreign sources, like Timothy Geithner.

I don't keep piles of cash in my freezer like Rep. William Jefferson of New Orleans.

And I didn't make billions selling collateralized debt obligations to individual investors and pension funds while also making private wagers on the collapse of the mortgage market, like Goldman-Sachs.

It's also very difficult for me to make HONEST mistakes about rental income from condos in Puerto Rico, villas in the Dominican Republic and sublets from multiple rent-controlled New York apartments.

Unlike Charles Rangel I don't have those kinds of investments.

Most of us don't and if we did, we'd be evicted, audited, harassed, terrorized and waterboarded before being prosecuted.

No, my life and my income streams are exceedingly boring.

So, what was my transgression?

UNREPORTED INCOME?!

How on earth can I un-report? My life, again, like most of our lives, is an open book.

The federal government knows who I am, where I live, what I do and how much money I make.

It's all documented by the gigantic legion of American businesses, large and small, who, in addition to struggling to earn a profit also have to serve as government tax collectors.

Every year these businesses send out millions of W-2s, 1099s and a wide variety of related tax documents that make it impossible for ordinary citizens to claim complexity or honest mistakes when confronted by a jack-booted stormtrooper carrying a Treasury Department ID card.

But, there it is in horrifying black and white on official Department of the Treasury stationery.

Non-employee compensation: $17,000
Capital Gains from the sale of stocks and bonds: $17,225

With penalties and interest... I owe $11,589.22!!!!

Quick, let's go to the videotape.

In this case, the TurboTax file for the year in question.

Click the "Income" button. Scroll down a few lines...

There it is, right on my Schedule C: Non-Employee Compensation, $17,000.

Whew, that's a relief.

Scroll down a few more lines to Investment Income and presto... under Capital Gain...

Proceeds from Sale = $17,255
Cost Basis = $15,900

Capital Gain = $1,355

Whew... relieved again.

Not very complicated. Not much wiggle room to claim an honest mistake. Every penny documented and reported to the powers that be in our nation's capitol.

But very quickly, my sense of relief turned to anger and outrage.

How can a dedicated public servant waste time and resources generating a 26 page document that seeks to explain why I owe back taxes on income that I have already been taxed on?

What's more frustrating is this: How can this Mensa member suggest that my capital gain on the sale of stock is exactly equal to the proceeds of the sale?

Does she believe that I PAID ZERO DOLLARS?

I'm not Hillary Clinton.

Stock certificates, cattle futures contracts and mansions in Chappaqua do not appear, as if by magic, in my Christmas stocking every December 25th.

So now I'm on the seventh draft of my reply letter. I've taken out the references to Cossacks and Brown Shirts. I've even removed my description of this particular bungling bureaucrat as Her Highness, the Twittering Twat of the Treasury. That one hurt. I like the alliteration.

But if we cannot expect the people that write the tax laws and collect the taxes to understand the complexities and requirements of the tax code, the very least we can hope for is that the people who have the power to terrorize us through the mail system should be able to read a simple--a very simple--tax return.

1 comment:

The sites founders. said...

A few thoughts. I had these lovely folks do a similar thing to me for some corporate tax filings.

I gave the local office a call, chatted about the letter and simply said I needed their records that proved my taxes were unpaid. I needed a full accounting of each and every dime they felt I owed along with their justification for each and every dime.

Turns out they're obligated to do so.

Things turned out much better that my first letter indicated they would.

Push back, demand proof, challange their assumptions.