IRS wants its Nickel

January 10, 2009

I just read an interesting article from the Detroit Free Press entitled “9-cent IRS delimma leaves lawyer confused.”

Apparently, Attorney James Howarth got a letter from the IRS stating that he owed five cents. Then later got a notice that he was due a refund of four cents.

Howarth was updated because of the cost of the check, his CPA’s fee, envelope, secretary’s time, postage and other related cost.

I see his point, but my question is about the other end of this deal. How much does the IRS waste to send these out,attempt to collect, and to process payment once the payments are received. There should be a minimum amount of tax due before a notice is sent out – and I can tell you that the minimum is not 5 cents. Also, if he worked with his CPA on a fixed fee arrangement, then he wouldn’t have to worry about calling him for help with the matter – or would he have to waste his time doing it.

The story gets better. A few days after getting the notice that he owed 5 cents, Howarth got a notice saying that he was due a refund of 4 cents, but he would have to make a formal request to receive it. He found it quite odd that the payment of the 5 cents he owed was not optional, yet the 4 cents they owed him was.

His dilemma now is whether or not he can net the two together, and pay only 1 cent or not. Of course, he called them, but said he gave up after “an inordinate amount of time on hold.” Once again, he should have made sure he had notice protection or some sort of fixed fee agreement through his accountant so that this would be handled for him.

All in all, I think he spent more time complaining about it than he did working on it.

Donna Bordeaux, CPA with Calculated Moves

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