Tax collectors can be so painful. You do your best to get your taxes done right, yet the IRS cleverly robs you of your money because you are never quite sure exactly how much to pay!
Only years later, does the IRS send you a deficiency letter stating you actually owed X more ad now have a fine. We've got a maddening tax system where the tax code is over 70,000 pages long.
Battling The Tax Collectors
Every IRS person I've spoken to has curiously been kind. Yet, despite their kindness, I still feel my heart drop every time I get a letter from them.
I'm not sure whether it's because the movies always portrays the IRS agent as a bad man in a rain jacket, looking to shake down individuals for all they are worth. Or, perhaps it's the fact it's little ‘ol you vs. the omnipotent government that presents a no way out scenario.
Whatever the case may be, dealing with the IRS sucks.
Those who work at the IRS or State Tax Collectors agencies are actually on your side. Sure, some have mandates from higher ups to milk you dry. However, most are willing to help you resolve your issues because they know how complicated taxes are in America. Perhaps this is one of the reasons why so many citizens have decided to just call it quits and not work!
One acquaintance I know worked for the IRS so of course I peppered him with questions to extract all the juicy details. I am against anybody paying more taxes than they need to. It's just not right for the government to tax more than a typical person saves a year. If the government could show they can efficiently spend our money, then fine. But, they can't even come up with a darn budget so forget it!
For all you conspiracy theorists out there, I think you'll really enjoy this post.
An Insider's View Of The IRS
Here is some straight up feedback from an acquaintance I met who spent years at the Ogden, Utah IRS center.
* “They are always watching me. My phone is always being recorded.”
* “I feel so sorry for everybody who calls in. They have no clue what they are doing on their tax forms, and frankly, I have trouble helping them too because it's so damn complicated!”
* “The government is very smart for adding an extra 70,000 pages to the IRS Tax Code since its founding in 1913. How else can the government payback all the accounting and financial planning lobbyists who took them out for steak dinners all these years? Tax help is BIG business!”
* “We really are on the people's side. Nobody is going to jail for screwing up on their taxes because we understand. 99% of the cases end in simple fines. Only the most outrageous tax evaders get locked up, so don't worry!”
* “Shit, they don't pay me enough to do this!”
Pretty interesting what's going on behind the scenes right?
How Tax Collectors Make More Money Off You Than They Should
Now that you've got some background on how one IRS agent feels, let me share with you a short story of my recent dealings with the New York state tax authorities.
Earlier this year, I got a letter in the mail from the New York State Department of Taxation and Finance. I was perplexed since I live in San Francisco, so I decided to give them a call just to make sure it wasn't some scam. Money scams are everywhere, so one can never be too careful.
I dialed 518-485-9094 and got through to a friendly gentleman on the first try. It felt like I won the lottery because if you call up any government agency in California, you'll be lucky to get through after the 10th try! Anyway, I asked him to explain the letter saying I earned taxable income in New York State in 2007 and that I owe state taxes. That's right, they are asking me for money from five years ago!
He basically said my company withheld NY State income in 2007, which gave notification to NY State that I therefore must have earned income in New York. This is obviously not the case because I spent a total of four days in New York State that year, only three of which was spent in the office. I don't know what the exact rule is, but I definitely know that if you work less than 10 days in New York, you don't have to pay New York State taxes.
I called up my company to get clarification for my 2007 W2 and they sent back a 2007W2C (Correction). From there, I sent my documentation and reasoning as to why I don't owe NY State taxes as a California resident. I called up the NY State Dept of Taxation again to ask when I should be expecting a REFUND! That's right. If I erroneously paid NY State income taxes, I should therefore get my money back right? Right?! Wrong!
IRS Statute Of Limitations, Suckers!
The friendly NY State Dept of Taxation employee mentioned that one must file an amended return or appeal within three years in order to get any money back from the State or Federal government! I thought this was absolute horse crap since they sent me a letter FIVE YEARS later asking for an explanation on my taxes! How am I supposed to file an appeal within three years if I don't know I am being robbed until five years later?
Incredulous, I looked up the IRS statue of limitations on how far back they can go to audit your tax returns and it does say three years. See below.
Generally, the IRS can include returns filed within the last three years in an audit. Additional years can be added if a substantial error is identified. Generally, if a substantial error is identified, the IRS will not go back more than the last six years.
The IRS tries to audit tax returns as soon as possible after they are filed. Accordingly most audits will be of returns filed within the last two years.
If an audit is for an older year, you may be requested to extend the statute of limitations for assessment of your tax return. The statute of limitations limits the time allowed to assess additional tax. The statute of limitations is generally three years after a return is due or was filed, whichever is later. There is also a statute of limitations for making refunds.
If the audit is not resolved and the statute of limitations date is nearing, you may be asked to extend the statute of limitations date. This will allow you additional time to provide further documentation to support your position, request an appeal if you do not agree with the audit results, or to claim a tax refund or credit. It also allows the IRS time to complete the audit and provides time to process the audit results.
You do not have to agree to extend the statute of limitations date. However, if you do not agree, the examiner will be forced to make a determination based upon the information they currently have. Therefore, the examiner may not be able to consider additional adjustments, such as expenses, that could lower the amount of tax due.
They say three years as a statute of limitation, but then they put in all this vague language to allow them to send audit notices way later! I could tell the NY State Tax employee was on my side, and I almost got him to admit to the hypocrisy of the rule, but he caught his tongue when he remembered that his line was being recorded by Big Brother!
Heads The IRS Wins, Tails You Lose
I'm sure the NY State Tax Department was hoping to extract more money from me once they sent the notice. Instead, their plan backfired because given I am a California resident. I am owed thousands of dollars back from New York as my company erroneously witheld some money for NY. But, will the tax department pay me? Nope, because it's past the three year statue of limitations to file an amendment. My company's hands are tied as well.
Even though NY State is violating their own guidelines by sending an inquiry five years later for more money, I can't get any money in return. Let's say I actually did owe money, then of course I must pay back taxes even though it's beyond three years! The traffic flows one way.
You're Not Paying Enough Taxes If You Want Bigger Government
My case clearly demonstrates the government's menacing authority over its citizens. Tax collectors are ruthless! The playing field is NOT the same. It's like going into the arena to fight Megatron. You will die if you don't kneel down and obey!
The government and the people who rule the government need you to fall in line. They use tax policy to control people's behavior. The only way out is to stop making money so you can stop paying taxes. For the love of strawberry cupcakes, please stop supporting big government. The government is brilliant for creating a 70,000 page tax code bill so mistakes are made.
Once you make a mistake, they wait for YEARS to send you a notice telling you why you made a mistake. Along the way, they charge an interest penalty 50X+ higher than what you would get in a savings account. If you don't pay, you will be fined further until they eventually throw you in jail for not complying.
Open your eyes people. The Borg will crush all of you if you are not willing to fight for your financial rights! Even the people working for the Borg are afraid! So what does that say about the whole system? Tax collectors are dream crushers, especially during hard times when people need help the most.
Related post:s
How To Pay Little To No Taxes For The Rest Of Your Life
Tax Rules When Deducting An SUV Or Truck As A Business Expense
Tax Savings Recommendation
Start A Business. A business is one of the best ways to shield your income from more taxes. You can either incorporate as an LLC, S-Corp, or simply be a Sole Proprietor (no incorporating necessary, just be a consultant and file a schedule C).
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Kill the globalist cabal. End the tyranny.
As soon as i saw this statement (Tax Collectors agencies are actually on your side. ) I stopped reading because i new you are another typical brain washed american tool that has been conditioned to think this theft called income tax is your civic duty.
This lie fed to each of the mindless dumbed down proletarians to warp their perceptions of reality into accepting this massive fraud con artist game perpetrated by bankers and government shills and sycophantic politicians to milk the public for all its worth.
Tax the goods but NOT the people or you are a DOU!CHE!BAG!.
This is right where government crossed the line right into fascistic tyranny and its been hell ever sins. And I can feel the cognitive dissonance welling up in your brain stem from the mere mention of this challenge to long held core ignorant mind control belife systems from all the high fructose koolaid you people have been sucking up sins you fell out of the birth canal.
but i suspect as is typical this is another cleverly disguised method of reinforcing the same con game psychology onto the unsuspecting peasants that might be actually getting fed the fack up with it all.
So to clarify, you don’t believe like the title of the post says that the IRS has clever ways of robbing the public through taxation? Or are you reading this post wrong?
I’m reading your comment and I don’t understand what you are saying. Is this satire? Are you trying to criticize financial samurai? Sorry for bad English.
“This is right where government crossed the line right into fascistic tyranny and its been hell ever sins. And I can feel the cognitive dissonance welling up in your brain stem from the mere mention of this challenge to long held core ignorant mind control belife systems from all the high fructose koolaid you people have been sucking up sins you fell out of the birth canal.
but i suspect as is typical this is another cleverly disguised method of reinforcing the same con game psychology onto the unsuspecting peasants that might be actually getting fed the fack up with it all.”
Not happy with the new tax code. After all these years, I owe taxes because I took some money out of my 401K to buy a house. Even having a loss on my business doesn’t help anymore. To top it off, the IRS sticks you with all kinds of penalties and don’t list them out on your account in their website. I had to wait 30 minutes to talk to someone to find out when they would take out my installment payment. Why can’t that information be in my account online?
Can’t get ahead or save for retirement anymore!
Mail them a check though, and they will have it cashed before the ink is even dry.
I divorced, got two rentals out of it, sold them to purchase a home and told my broker and lender I wanted to do an exchange (1033?). They didn’t file it for me and didn’t tell me they didn’t do it. I got slammed for nearly $100000. Which I can never pay back as long as I live. I no longer have any deductions, if I work overtime, get a second job, rent out my home, I’ll be bumped into the next tax bracket and pay more taxes in following years. They are levying, my home threatening my small savings, my car, my paycheck. If I retire I will lose my home because I won’t be able to afford to pay them back on social security. I hired a tax remediation company they asked for $6000. I feel I’m a slave to the IRS and will be living in poverty for the rest of my life, penniless, with each following tax year adding to my debt. Truly, there’s only one desperate way out from what I’ve deduced, no one is helping me. Not even the consumer protection agency reruns my calls
Jaysus! I only came here because I am searching for ways to get someone from the IRS on the phone. I need to prove who I am to them through the ridiculous amount of verification they are asking for. I put in said info they say no match. I call them no answer. I have always lived paycheck to paycheck. I havent made the best life decisions and I am 40 with no 401k no property nothing. I am actually looking for work as the country shut down for covid. All that said reading your comment makes me even more furious at how the tax system is. Stick with it and dont do anything drastic. I know things dont always seem like they are great and I hope you have some kind of support system with family or friends. I can say money isnt everything cuz I have never had any and I have lived nearly half or more of my life. Keep ur chin up.
Every law abiding average (read not super wealthy) should stop paying taxes because we are not represented any more. We make a pittance as wages yet the charger maximum andbit given to the wealthy so some CEO can buy himself a boat every year when regular American can’t even afford a basic house. NO TAXATION WITHOUT RERESENTATION I SAYS!!!! The greedy have corrupted the entire American system. They have sold out regular americans. Capitalism without proper oversight is just plain GREED.
The IRS is full of “POOP!” I had a representative tell me I wasn’t listening to what she was telling me. So I listened and tried to inform her that wasn’t the case and she just kept telling me I wasn’t listening to her. HOW IS THIS OKAY? WHEN I CAN’T EVEN TELL THE IRS THAT WE HAVE CONFORMED TO THEIR LETTER REQUEST AND THE REP JUST KEEPS TELLING ME I AM NOT LISTENING TO WHAT SHE IS TELLING ME. WHAT A DAMN GIMMIC!!!!!!!
I’m one of those “a” holes who “doesn’t pay my fair share”. Income Removal Service thinks I owe at LEAST a kidney. What gets me is so many people get horribly angry at people like me because they say “If I have to pay, so should YOU!” They don’t understand that just because they don’t have the balls to ignore Megatron; that doesn’t give them the right to get angry with me! Just because they DON’T KNOW THE LAW I should pay what they are getting fleeced for. 90% unless something has changed with the latest edition do not fall into a category wherein their income CAN BE TAXED! So they are doing it voluntarily based on threat from COLOR OF LAW. They are IGNORANT OF THE LAW and get pissed when YOU AREN’T. They should be pissed at the Income Removal Service for jacking them ALL THESE YEARS instead of me for not playing the game.
How do you get away with paying no taxes?
I disagree with the general characterization of NY State IRS employees as “kind” people. The one time I had to contact them via telephone to address an error I had made which resulted in non-filing, the guy I spoke to on the phone–“Ed”–was the rudest, most condescending asshole I have ever encountered ina professional capacity. If he was a customer service representative at ANY OTHER COMPANY I would have asked to speak to his supervisor and demanded he be fired. To this day I am astounded that “Ed” thought it was okay to say the things he said, using words like “retard” to characterize my clerical error on my income tax form. To be honest, if he had adopted that attitude towards me in a public venue, where he was within my physical reach, I would have smacked the shit out of him.
https://www.thenation.com/article/town-turned-poverty-prison-sentence/ mines yes and I’m being punished even worse so I wonder what I should do…? all im getting is hung up phones and close doors and my life is falling apart
Just a small victory but one I’m sure has been past around maybe even used in training.for the IRS. When I was young and feared nothing I missed a few years of taxes. I started to think hey I’m not a teenager maybe I should act like it.
So not really knowing the last year I filed I called the IRS and tried to ask. I was left feeling dumber than I was, by an agent who somehow didn’t understand forgetting. Even an address to a P.O.Box I sent the last return from. (I didn’t bother to say I’d been 21) Much of that year was foggy.
After hanging up the phone and searching for clues to the old address I had a flash of brilliance. I redialed them and this time I asked to speak with someone in their auditing department.
It was their turn to sound dumb when I was asked why…..And maybe one of the few times they were flat speachless when I said ” because I want to be audited”. In fact I thought I’d been hung up on, but I’d only been transfered. The next agent answered and I repeated without an explanation ,”yes sir, I’m still on the line and still want audited”
A smile was on my face as I thought of agents gathered round a speaker phone while an agent proceeded to say ” no mam you really don’t” and I firmly stated I really did! We continued back and forth a few times. I finally lost a bit of my temper and said “are you refusing to audit me?” With a sigh that sounded sorry for me , I was transferred once more.
This time to someone in the department I had asked for , where I once again said the same thing. This time I was told people do not usually call and ask for an audit so he’d love to know my reason.
I explained, I was lucky I lived past the parties of my 21st year, and remembered my name. There was no way I’d remember an address. I could swear I heard laughter in his voice but he said, “you won’t need an audit.” He wanted to transfer me but I asked if he could please help me because he hadn’t made me feel stupid.
Of course the name, current address ,S.S.number , and birthday was asked ( it hadn’t been by any other agent on that call) He went over my record and then he chuckled and said , “well miss, it looks like you maybe have money coming to you so I’d suggest filling”. He even made sure all the information they had for me ,was sent to me. He said that was to ensure I didn’t feel the need for an audit again. Lol!
My husband came home that night and wanted to kill me then move. He couldn’t believe I’d said that to the IRS. When my information came in a big envelope from them…. in record time, he almost passed out. I think he searched the sky for black hellicoptors for a week.
Anyway hope that gave you all a laugh. I’m in my mid 40s now but everytime I do my return I still giggle . I think maybe someone will see my name and say, ” don’t worry its fine, really that nut case will want the audit!”
Taxes, for any nation, are actually quite simple to understand. Pay them, or they will come after you, and eventually use force to place you in jail or harm you. Taxes are tyranny. There is no gray area on the matter. You are part of the problem if you willingly declare income and pay taxes. Collectivist models of dominance survive on the dimes of others. Stop paying into these corrupt systems. Stop believing the lie that delegation of security makes for a better society. Yes, I am advising others to stop paying taxes to their fraudulent false government occupations.
How do you get away with not declaring income?
Are there any special circumstances, like becoming disabled , that can allow you to pay less than the amount State of NY assess ?
I became disabled in 2005 but the State kept adding interest and penalties so a $6000 payments ballooned to $17000! Meanwhile , I had no income . Can one work out with State of NY to release them from interest and penalties and just pay the principal?
Can you please answer the above question? The State had suspended my DL and now I can’t go see my Drs and get therapy .
I want to pay my share of the bill but the interests and penalties are outrageous !
Robby is the keyword. These people are always looking for more ways to get our money. WE go to work, and have to pay a full 30% of our income, and for those of us who don’t make enough to make it from one paycheck to the next, that is a lot of money coming out of pocket. Now, they are taking people’s winnings at the casinos, and people who buy homes never own their homes, because if the government don’t get their money, you soon learn who owns your house. then there is city taxes, taxes on groceries now, taxes for this, taxes for that. I would like one question answered: When will slavery be abandoned in America!
Are you crazy? The people that work at the IRS are NOT your friends! I have had nothing but rude and inefficient IRS employees everytime I call them or send mail to them. The biggest problem that I see is that the left hand does not know what the right hand is doing. By that I mean there are so many different offices of the IRS that collect tax information and if you do not work with the exact same person at the exact same branch, you will get screwed! I have had nothing but problems with them people for 5 tax years where they said that they have not received our tax 1040’s. I use to use Turbo Tax but no more, it got to the point where I had to hire a tax attorney to communicate to them because if you try to handle it yourself, you’re in for a big headache. I even mailed and faxed them Turbo Tax receipts where all of my 1040’s were filed to them electronically (their preferred method). It got to the point where we had to hire a tax attorney because of their inefficiency. When it is time for them to collect they sure want their money pronto, but it they owe you money, they can take their sweet A_ _ time about it. Now you tell me, how is that fair? Anyways, it got to the point where we are now looking at moving somewhere where they can’t touch us for not even a penny!! The IRS can pound sand as far as I’m concerned.
What was the IRS asking you for? What was the error and how was it resolved?
I think it’s strange how sometimes it’s more income in the long run to make less income and lower your tax bill, depending on the government’s chart calculations and tax brackets. Now I think I know why the poor stay poor and the rick stay rich, sometimes by choice. Then again it would depend if the democrats are in office or the republicans.
Make more by making less? Marie I’m sorry whichever schools you went to did teach you about marginal tax rates.
The IRS never even sent me a letter.NY said I owed $9,000 from 2002 !Its 2015 wtf! A lawyer cut me check from a lawsuit. They are claiming I received $22,000.I Gave my bank statements from 14 years ago! I told them lock me up ! I am tired of 14 years later you come to me.Bullshit go get bigger money ! Assholes….
[…] How Tax Collectors Cleverly Rob You Of Your Money […]
HOW CAN I VOLUNTARILY TURN MYSELF IN AND GO TO PRISON FOR NOT BEING ABLE TO PAY BACK TAXES? I OWE ABOUT 16.000 DOLLARS AND I PAY 1,000 A MONTH RELIGIOUSLY, THE AMOUNT NEVER CHANGES BECAUSE OF PENALTIES AND INTEREST. I AM LIVING WITH CANCER AND AM UNABLE TO WORK IN A “REAL JOB” SO I WORK AT HOME…I GET UP IN THE MORNING SICK AT HEART KNOWING I AM GOING TO DIE STILL OWING THIS MONEY AND MAYBE MORE. I FEEL MY ONLY HOPE IS PRISON.
Just stop paying!
I got a letter from the Ohio taxation department in 2013 stating that I didn’t file my 2012 return. I file my return through turbo tax and submitted my returns the same as I had years before. So I was shocked to find out the return didn’t go through. I contacted the Ohio taxation department who advised me I could sign and file for free on there website. After I filed they said I was due a refund of almost $300. I might be wrong but it is my understanding if I am due a refund I paid too much tax money to Ohio. Well now its 2014 I file my federal return and get notice that almost $300 was deducted from my federal return because I owe Ohio taxes. A week after I get my federal return I file my state and I am due refund. I get another letter saying Ohio is taking that as well. How is this possible? How does it make any sense that I paid too much into taxes and still owe Ohio money? I have searches the web for an advice or a way to file a compliant. Any information would help. Thank you.
I have been separated for 2 & 1/2 years. During the time my estranged husband and I were together, I caved in to his stupid, ” I’m the man of the house…I will take care of finances…”, mumbo jumbo. I let things be, now I recently had to make a payment arrangement with the IRS and just had a levy placed on my financials from the state of California. I have been in Texas for the past 2 & 1/2 years and he has been bouncing from New York and California, making him a former US Marine “untrackable”. WTF???!!! No!!! The fu@$!#/ IRS and California Tax Board are not doing their due diligence to get him to pay as well. I am having to foot the entire bills. He is happy go lucky not a care in the world all while my life is flipped upside down. Peeved as f@$! !!!
Right now this moment the IRS owes me 3 years of income tax returns which brings my total to 19,775.00. The IRS has tied my money up fradulatly giving it to this place , putting down false places that never existed saying I worked under the table when it’s all lies. They even pulled the card and said I owed taxes . This is complete bull shit. I’ve never owed taxes because I know how to do them and I have proof of years of tax papers, and this is pure dam robbery. How can you take a total of 19,775.00 and say this is what your refund is now 4,000.00 and something . This pissed me off and I’m not letting into this so I told the IRS I’m hiring a attorney and we will see how much of my income taxes for 3 years I get back and you will pay my court cost. Always trying to steal so I’d be watching carefully and paying attention to your taxes and refunds and so on and so on . I’m livid that’s my hard earn money not theirs to do what ever they fucking want
hey owe you? Time to get going and claim that money back!
In year 2012 from Jan 10 to Dec 31 worked and stayed in PA State, before that from Jan 1st to Jan 9th worked in NY state at same employer but my employer had reported total federal wages showed in NY state wage and tax withholding reported very small amount which i paid at pay check, in addition to reported PA state wages and withholding as per my working days.
how to compute NY state tax return?
Taxation is theft. Tax attorneys should be focused on helping clients pay as little as possible through ANY means. Offshore leasing agreements. Shell corporations. “Deductions”. As little as possible. Zero is optimal. Ultimately the client assumes all risks. Yet instead, all todays tax attorneys focus on is compliance and veiled intimidation. Show me one tax attorney thats on my side. It’s almost like they work for the IRS and not the client. Attorney client privilege. Ever hear of it? Stop encouraging compliance and focus on your clients. GE made billions and did not pay any taxes. I doubt the GE lawyers spent their billing hours scaring GE into quivering compliance with the IRS maze of laws. Stop consulting me on consequences. Someone get me a tax attorney offshore I can have a REAL consultation with under attorney client privilege without the fear of being reported under the new Obama laws.
Here is the thing. Tax codes whether they be federal or state are built for compliance. When taxpayers fail to pay timely interest and penalties run. And the rates are higher than anyone can get at a bank or a financial institution. Normally, the statute is 3 years but in certain cases it can be 6 years (substantial understatement, 25%) or indefinitely if for fraud. These rules have been on the books for years.
Each year stands on its own under tax codes. If one fails to seek a refund on a timely basis it is gone. I cannot tell you how many new clients I have had who never bothered to file returns with nothing more than paycheck income who have lost refunds merely by failing to file such returns ( and to offset tax due years by the closed refund years).
The rules you mention just scratch the surface of some of the draconian penalties the IRS and state taxing authorities can assert. For example, the failure to file, not the failure to pay mind you, can result is a 25% penalty. Now, all the taxpayer has to do is file the return without paying 1 cent to avoid this penalty. Rule #1 in the tax world is to always, always file your return by the due date or extended due date even if you cannot pay a thing.
My point to all this is that you are right in many of your comments but there are just so many simple things that can be done to avoid many of these problems. Sadly our financial and tax world is complicated and to avoid these problems it helps to know the rules of tax engagement and to have a good accountant, CPA or tax attorney to keep you compliant.
I know this stinks but with the interest and penalties at issue, it may be well worth it to have assistance. Just one dumb tax attorney’s opinion.
Thanks for stopping by Steven. I will absolutely ask for help if I reach an impasse with future taxation issues. I don’t expect any difficulties given I’m on my taxes like a hawk every single year. I’ll stay vigilant!
Why did you not notice NYS tax being withheld on your 2007 W2? Wouldn’t it have been in a separate box?
I noticed it, but NYS tax is always withheld and then refunded. This time, NYS decided to send me a letter asking me to pay MORE NY taxes. They never did this before. It’s also not a coincidence that 2007 was a big income year. They are being greedy.
I work in the tax industry and I’m not worried about my job going away because of a simpler tax system. The biggest reason the US will never have a simple tax system is because the government uses it to encourage certain things – tax credits for education and first-time homebuyers are a few examples. And don’t forget the making work pay credit ($400 for single, $800 for married) that we were supposed to spend to improve the economy. Coming up, they are using income tax forms for payment of penalties for people without health insurance under the new healthcare reform. And on and on it goes. . .