My first visit from the IRS

Jul 23, 04 | 10:40 pm by Patri Friedman

I had an interesting experience today - my first visit from an IRS agent. I haven’t filed my 2002 or 2003 taxes yet, for several reasons, most notably that I had no net income in 2002 (I carefully sold stocks to add up to no capital gains), and little if any in 2003. Hence I don’t owe anything, and there are no direct financial penalties for not filing. (I expect there are indirect penalties in terms of increased audit likelihood or something). Add this to my chronic procrastination, which is especially bad about things I don’t want to do, and the fact that I hate the IRS and the FedGov and paying taxes, and you have today’s visit.

In order to scare me into complying, they had an inflated “estimate” of my income and what taxes I owed. The estimate was based on adding together my W-2G gambling winnings, my W-2 consulting wages, and the total value of all my stock sales and dividends. Of course, this assumes no gambling losses, no consulting expenses, and most importantly, it assumes that the cost of all stocks sold was zero! Hence the absurd estimate for a year in which my taxable income is going to be zero. Using this estimate, she told me that if I didn’t file by next week, they’d assume I owed them tens of thousands of dollars in taxes, and gave me some forms about how they’d Collect it.

She also presented the (false) information that I’d payed $43K in mortgage interest over the year. I guess this was meant as a “you must have income”, although it seems rather a double-edged sword since that is a totally deductible expense! But its wrong, because I’m only a 1/3 owner. Both the bank loan and the title are in the names of all the owners, as I informed them.

So now I’ll spend the next few days pushing papers for the feds instead of getting useful work done. Not much fun, but hell, its still better than a Siberian labor camp. Instead of an early and unpleasant death, afterwards I can get back to work on sneaky ways to escape the behemoth. While I yearn to escape, I must also admit that as behemoths go, its far from the worst.

5 Responses to “My first visit from the IRS”

  1. Lee Murach Says:

    I was in a similar situation not so long ago. I didn’t file a california return because I didn’t earn any income, and so had none to report. I considered filing a zero return, but I thought that might be asking for trouble. So a I get notice from the State detailing my mortgage interest payments, and telling me either to document the source of the payments or file a return. I filed the return. No problems so far.

    My guess is that once they’ve forced you to file, they’ll be done with you. Hunting down nonfilers is probably a quickest and easiest way to make a few bucks. You’re bound to find folks who actually do owe taxes, interest and penalties, according to “the law.”

    I wonder how many 1099s and W2s get lost on their way to the government. It seems that if your employers/clients (or their accountants) slipped up and forgot to report your income, or the post office lost the forms, your income might be difficult to “estimate.”

  2. Charles Hueter Says:

    A friend of mine experienced the much-feared “identity theft” problem a few years ago. Someone chalked up a bunch of taxable income in his name and then bailed, leaving him with the “tax liability” and a very unyielding IRS process. My friend eventually sorted the thing out, but it took 18 months and a lot of phone calls and stamps.

  3. jomama Says:

    Type “fuck the irs” in Google and laugh the laugh sought by all real folks.
    It’s the only revolution that makes any sense to me.

    I even added to the list by doing the same on my blog.

  4. Critto Says:

    tell those IDIOTS from IRS, that they are the COMMIES.
    And not some “idealistic” American commies, but the hard-headed Central European commies.

    In Poland in the 1940s, when Poland was delivered as a “gift” to Stalin by her “friends”: F.D. (Fucking Despot) Roosevelt and Churchill (also a despot), the commie rulers (or, rather the rulers-to-be,because nobody knew if they will remain there) have devised the new way to confiscate assets (mostly, the real estate): TO ASSESS THE FAKE TAX EQUAL TO 50% of ITS VALUE, that the property owner allegedly “evaded”. Then they took the property as the “compensation”, and usually finished that they “are good because they don’t send the owner to prison” (which, in the stalinist times, meant DEATH). Yep, and now the retards from IRS are emulating it … How funny. Why is the FedGov ALWAYS simulating either the NAZI, or the COMMIE regime? Why can’t it be a NORMAL government, as eg. in Canada?

    Joining With You In Solidarity Against the Statist Racket ,
    Critto

    PS. IRS = Institution to Racket for the State

  5. Aaron G. Says:

    Oooooo….crapflood. Enjoy, John.

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