The IRS and a 9 cent dilemma

Sorry if this is a d_b, but a search for it came up empty. I'm trying to figure out how the IRS is nickel and penny-ing this person if on the tax forms you're supposed to round everything up (or down) to the nearest dollar amount.

http://www.freep.com/article/20090103/NEWS01/901030347/?imw=Y

January 3, 2009

9-cent IRS dilemma leaves lawyer confused

He owes a nickel and is due 4-cent refund

BY JOE SWICKARD
DETROIT FREE PRESS STAFF WRITER

"It's not the money; it's the principle" is an old saying that usually brings a knowing, world-weary scoff from veteran Detroit criminal defense lawyer James Howarth.

"But I think this time with the IRS, it is the principle," Howarth said.

After all -- this is about 9 cents.

While many may fight the Internal Revenue Service over thousands of dollars, Howarth said he's in a dilemma with the federal agency, and he insists it's no chump change controversy.

"We are talking the IRS here," he said.

In mid-November, Howarth received notice that his FICA account, even after an adjustment, was out of whack.

He owed the IRS a nickel. And the IRS was serious.

It advised him to act promptly "to avoid additional penalty and/or interest."

Howarth started calculating how much that nickel was going to cost him.

As he figures it, there is the 5 cents plus the cost of a check -- payment must be made by check or money order. Then there is his CPA's fee, an envelope, his secretary's time, his own time and a 42-cent stamp.

"The costs are several hundred percent over the nickel," he said.

But then a second letter arrived. This one said Howarth had a refund coming.

The amount? Four cents. But to get it, Howarth would have to ask for it because it was less than $1.

"When I owe them a nickel, I must pay them," he said. "It's not optional. But when they owe me, I have to ask for it."

Howarth said it is unclear from the letters what connection -- if any -- the 5-cent obligation has to the 4-cent refund.

He said he is unsure if he now owes one penny or if there was a recalculation resulting in a 9-cent swing in his favor.

"I just don't know," he said. "But I do know that if I were to walk into the IRS office with pennies taped to a piece of cardboard, they wouldn't accept it."

Howarth said he called the 800 telephone number on his letters, but gave up after "an inordinate amount of time on hold. And I'm sure the agent would have been delighted to have this file land on his desk."

IRS spokesman Luis D. Garcia said the agency does not comment on individual accounts.

As for Howarth, he said he's consulting his accountant -- and he might try to follow the lead of Wall Street financiers in seeking a resolution, although he fears his Detroit address will work against him.

"I might apply for a bailout," Howarth said. "But, for us, there seems to be some sort of stigma."

Contact JOE SWICKARD at 313-222-8769 or jswickard@freepress.com.

 

Dude just ensured a lifetime of audits by going public with this. Hope that nick' was worth it.

 

The government wasted more money and time trying to get the four cents back. What a fucking waste.

 

Absolutely. The envelope that the 5-cent request was sent in cost more than the 5-cents. In short, the IRS sent two letters costing more than the amount owed.

Dumb.

 

One of my college summer jobs was working in the accounting department of an insurance company. The policy there was to not worry about debts of less than something like 10 bucks (can't remember exactly; this was 15 years ago) because it wasn't worth it.

 

Years ago when I moved and changed phone companies, the old phone company sent me a refund for an overpayment. They sent me a check for ONE CENT. Instead of going to my bank to cash it, I figured I'd go to the bank around the corner to try cashing it. The bank refused to cash it because I didn't have an account there.