I came across this MUST read article. Note that this is written by a very experienced EA (“IRS Enrolled Agent“). He notes that it is hard to communicate with the IRS from Alaska. It is much harder for U.S. citizens abroad to communicate with the IRS. This is definitely worth a careful read. You will understand the IRS better.
Alaska EA: It’s not ineptness or incompetence, The IRS is stealing from you sitnews.us/0113Viewpoints… – #ameriansabroad lackaccess to IRS too
— U.S. Citizen Abroad (@USCitizenAbroad) January 14, 2013
Those who are NOT twitter literate can read the article here.
January 12, 2013
Saturday AM
By 1989 the Internal Revenue Service had closed virtually all of its field offices in Alaska, concentrating everything in Anchorage with an adjunct in Fairbanks. Travel budgets for IRS employees were virtually eliminated, too, so by the early 1990s almost all audits in the state of Alaska were done by telephone and fax machine. It was a system that worked because there was some IRS employee in Anchorage available via phone to us folks in the bush who would deal with our problem. Then in 2007 we got a new IRS commissioner and considerable transition in the Anchorage office, more or less simultaneously. One Sue Matters took over in Anchorage what used to be called “Problems Resolution,” put up a sign saying “Walk-ins welcome,” and turned off the telephone. So Anchorage is serviced, and the rest of us have been dumped into a large black hole.
To give you some idea of how crazy this crap is back about seven or eight years ago I had a client who sold out a large fishing operation in Alaska to move to the Midwest because of his wife’s job situation. So a Midwest IRS office gets a big Alaska business operation cashing out and expects to cash in by auditing the account. I call the IRS auditor and ask him when by telephone he will be ready to do the audit. Aghast, he insists a telephone audit is not possible; this to someone who has been handling telephone audits, at the IRS’s insistence, at that point for almost 20 years. It took four U.S. Senators to convince the IRS in this office otherwise, and the case was ultimately closed out routinely, by telephone.
Since 2007 the situation has not simply deteriorated; I am now convinced it has just become a damned scam, and I am very tired of it, and am disgusted by it. The IRS is stealing from the public intentionally. They make mistakes, assess penalties on their own mistakes, then make it virtually impossible to get to someone to fix the mistake. Multiple situations, indeed most of them arguably, are subject to either elimination or reduction of the penalties imposed; so the IRS has intentionally created a system so dense, so obtuse, and so based on multiple levels of extended call-waiting and confused and confusing messages, frequently ending with a disconnection or unintended reconnection to another IRS office in another part of the country, that even I as a professional with 37 years experience cannot wade through it with any reasonable prospect of success.
The purpose of this crap is to exhaust you and make you go away; to steal your money.
Here’s another case in point, one I am trying to deal with on the phone even as I one-peck this article. I am now in my seventh hour of trying to deal with a matter that should have taken no more than ten minutes to fix. Back in August last year a client mailed in a tax return I had prepared on their behalf, and for which an extension had been filed, and attached to it a check for several thousand dollars to pay the bill. The check was promptly cashed, but for whatever reason the IRS did not get around to processing the tax return until March 2012, at which point the automatic processing automatically assessed massive failure-to-file penalties. It should take a matter of minutes for some IRS person to reverse this gaffe.
But instead the taxpayers’ 2011 refund has been reduced to pay for this incorrect assessment, so the IRS already has the money, and there is no easy way to get it back. They really have neither intent nor desire to give it back; they have created a system designed to exhaust you into just giving up. The system is specifically designed to systemically steal your money. Oh, they have a system in place to attend to grievances; it is just completely inaccessible to anybody, and it is intentionally designed that way.
We need a new IRS commissioner right now, and we need a new attitude and a new system immediately. The IRS gets plenty already; they do not need to steal, and the thieves need to be cleaned out now. The thieves in this case are the” systems hogs” who worship system, but exclude the customer (the taxpayer in this case) from the process; i.e. a standard current business model, take your money and then tell you to go to hell.
No taxpayer or accountant should have to endure the intended torture of trying to deal with the current bureaucratic structure of the IRS. The grievance and appeals process is not broken; it is designed to serve the needs of the bureaucracy at the cost of the customer (the taxpayer), and that is the intended result.
Here’s another case in point. Back in the fall of 2009 New Zealand national security intercepted a tax package I had sent to a client in New Zealand because of a slight address flaw. They held onto it for more than a month before forwarding it to the client, so his filing was late, and substantial penalties were assessed, and collected. These penalties were all reversed given the circumstances. What occurred in the fall of 2009 was resolved in the summer of 2012. In the meantime the U.S. government was using this man’s money. After running this case through multiple stages of appeal, and getting nowhere, I finally traveled to the Fresno, California, IRS offices to see someone face to face.
At that point I was told that I had to go through a series of no fewer than five to seven written appeals, all of which would be processed by the computer, and rejected (the go to hell, customer, part of the business model) before a single human being would intervene in the process. And that basically is what happened. Almost three years to resolve a simple case that should have taken a few minutes on the telephone.
Up until 2007 the old system took care of these problems in a few minutes. Up in Anchorage there was someone who answered a telephone, or returned calls (something the contemporary IRS virtually refuses to do), and routine problems with the IRS were handled routinely, and in very short order.
I respectfully request immediate action on the part of our two U.S. Senators and our Congressman to restore IRS customer service to the rest of us in Alaska about the time they finish reading this. Waiting for years while trying to deal with an impossible system is just stealing by another name. And wasting my time by the bucket loads trying to solve a simple problem is just another form of rip off crap.
Update: After almost ten hours of dithering, primarily waiting for some IRS person to answer a phone, the case on which I was working to recover an unwarranted FTF penalty was rejected by the computer. The IRS staff person was quite nice in explaining to me the randomness of this action. “We have no idea why the computer decides as it does. The computer decides, and all I can do is inform you of that fact.” I now get to write five to seven letters of appeal, all of which will be rejected out of hand by the computer, before some IRS person will extend to my client the courtesy of reviewing the case.
I urge you to forward this article to anybody and everybody, and to, furthermore, relay your experiences with the IRS to your Congressperson and to your two U.S. Senators. Only by so doing can this mess be cleaned up. Hearings are generally required to accomplish that, and that takes noise from the hinterlands. This is not in any sense exclusively an Alaska problem; this mess affects everyone who has to talk to the IRS about their taxes.
David G. Hanger, EA, MBA
Ketchikan, AK
Published January 12, 2013
It appears that the author wants copies of this letter to be shared freely, so that I’ve added it to the post. This should not be a violation of copyright.
*@Petros, reading this letter makes me realize how fortunate I am. I had my charitable contributions audited by mail about 5 years ago and became very upset because I had provided the necessary substantiantion documentatation, for which I had a certified mail return receipt, well within the IRS deadline. Yet I kept getting threatening letters as if I had not respsponded. Not being able to get anything but voice mail where I left message after message but never had a callback, I got desperated and called the Taxpayer Advocate and got action almost immediately.
Then more recently I got a deficiency bill because several items of taxes withheld at the source and reported properly on forms 1099 were missing, for which the IRS wanted to charge me interest and a penalty. The phone number on the notice did not even have voice mail. It answered with a “Please enter your PIN number” response. Since I do not, as far as I know, have a PIN number, I was stymied at a dead-end. So again I contacted the Taxpayer Advocate who transferred my call to a “live” person at the IRS who determined that due to human error the tax withheld had not been entered by IRS. The documentation had been correct from the beginning. It took another phone call to another IRS person, who answered on the first ring, to find out what to do to get it corrected I had to resubmit all the documentation since “the case has been closed,” but jumping through a few hoops they did correct it in about 6 weeks.
The Tax Advocate has worked well for me when trying to deal with the IRS directly did not.work at all. Thank the Good Lord for the Tax Advocate!
Over 13 months since we made our OVDI submission.
@ bubblebustin
Over 13 months is cruel and unjustifiable punishment. I’m over 8 months waiting for a stamp on an I-407 which some people in Europe got within weeks. The latest e-mail I got from USCIS.CANADA was to try submitting a FOIA G-639 to find out the status of my application. But then when I searched for a FOIA G-639 it said it could NOT be used to check on status. Go figure!
I would second the “stealing by design” intent. I have to receive confirmation of my 2011 return even though I know they cashed the check and requested a copy of my return, which I was promptly sent. Be interesting to see what shows up in the mail this coming summer. Hopefully, I will only have two more years of filing to go if all goes well with the citizenship app this year.
@USCitizenabroad.
I read that yesterday and agree. This one needs wide circulation, so thanks for posting it.
@ a
We never received a confirmation from the IRS of it having received our 1040s. When no tax is owed there isn’t even a cancelled cheque as proof. The CRA gives us the courtesy of an automatic annual Notice of Assessment but fat chance the IRS will ever do the same. I think it’s because they let you go on your merry way and then just as the Statute of Limitations on a particular tax year draws near they “getcha” with an error which now has reams and reams of penalties attached. Interesting how you requested a copy of your return and got it. I never knew you could do that. Is there a form for that?
This reminds us of the real legacy of Commissioner Shulman who liked to brag about Customer Satisfaction. I would say this EA would strongly disagree as would all of us!
Em, I have always gotten a confirmation. Last year was the first time I didn’t. Don’t know what changed. It might be that there was an issue with the backlog due to cutbacks but who knows?
You can go to the IRS site and request a copy of any year you like via an online application. It was pretty simply. They said it would take about six weeks and it did. I got my bank to track the payment and they gave me the copy of the cancelled check. I keep both in my files. Better prepared than sorry later.
I followed some Brock advice to send a $1 check for a recent problem where they wanted $2000. They didn’t send acknowledgement that the problem was resolved, but they sent me an IRS check for $1.
@Mark Twain
lol.
Even Kafka himself couldn’t have imagined this degree of bureaucratic surrealism and lunacy.
“Em, I have always gotten a confirmation.”
@ a
Well that just amazes me. For 30 decades we sent in 1040s with no automatic confirmation received. Are we the only ones? Thanks for your information about the online request.
Em, I am beginning to think there is no standard that can be counted on with the USG in its dealings with ex-pats. It’s just kinda “whatever”, depending on the day and the alignment of the stars. It could be it’s just taken them as long as it did to realize that I was outside the country, lol. They aren’t quick thinkers after all.
Do you all ever get the feeling that we are witnessing the sinking of the Titanic?
Bubble, for a long time. Husband and I were discussing Obama’s press conference today and he noted that the POTUS talked about SS, Medicare and other entitlements being totally on the table in the budget discussion and then he said,
“I am beginning to agree with what you’ve said all along, Honey. By the time you reach retirement age, there won’t be anything left.”
I reminded him there is technically nothing left now but IOU’s for IOU’s.
There was a great post on the financial troubles of the USG on Burning Platform recently, breaking it down in terms of a household budget. I laughed when I read it but the reality is that it’s not really funny b/c it is all too sadly true.
http://www.theburningplatform.com/?p=47303
I just reread this — “For 30 decades we sent in 1040s …” LOL, now you all think we’re at least 300 years old! Obviously I meant to say 3 decades. Besides, if we really had been sending in 1040s for 300 years we would be certifiably insane by now. 😉
@ bubblebustin and “a”
I get that sinking feeling sometimes too but steady as she goes. Maybe this ship can be turned around. We’ve sure got a lot of good folks trying to do just that.
In 2010, I didn’t even bother filing a return because my income was low and my investments were just losers. I received notification from the IRS to file, “or we’re going to start withholding from your accounts”. That’s a pretty big threat itf you ask me! What? They are going to withhold from losing/negative posistions? I prepared the returns, and not surprisingly, ZERO tax due!
It’s already hard enough to live and in another country and make sure that you comply with the local laws. After all, if you break a law in a foreign country, the US State Department say they can’t help. As far as I’m concerned, the US part is unwelcome and a burden, and I can’t wait to join the ranks the renouncers.
@Roger, it’s good to know about your experiences with the TAS. If they try to give me a hard time over my returns, that’s the first place I’m calling!
p.s. I Think I will keep the $1 IRS check. If I remember the law correctly, a check writer is required to recognize that a check is not cashed, but outdated, and must replace that check (I remember once receiving a replacement from a business after 2 or 3 years).
Pingback: Cyprus: The attack on the principle of saving | U.S. Persons Abroad - Members of a Unique Tax, Form and Penalty Club