Proof of the Need for IRS Reform

An April 15, 2009 Reuters article includes Barack Obama's campaign promise about IRS reform. Obama says, "We need to simplify a monstrous tax code that is far too complicated for most Americans to understand...we will make it quicker, easier and less expensive for you to file a return..."

Someone should warn the President, negotiating lasting peace in the Middle East may be easier than simplifying the Internal Revenue Services. And I've just learned this (again), the hard way.

Some of you may remember my earlier blog entry about getting a back taxes bill for 2006 due to a short sale of my home that took place during that year. I tried to fight the bill, but it turned out that I really did owe the money (about $800), so I decided that the right thing to do was to face it and pay the tax. I also decided that paying $800 all at once was too burdensome for me (more than one month's rent). I thought it best to set up a payment plan with the IRS, and then when I got the amount down to something more manageable - say $400 - pay off the rest in full. After all, the IRS did offer me the option of setting up a payment plan. It seemed like it would be an easy and fair route.

So begins my personal adventure with the IRS that has taught me where the expressions "pulling out my hair" and "banging my head against a wall" came from. This should have been easy! Here's my timeline of events (be warned, it's scary and complicated):


December 5, 2008: Take all my paperwork/ bill from the IRS to their local office. Meet with IRS Representative #1 who tells me I can set up a payment plan right there. Yes, $40 a month will be fine! No, I do not need to do any further paperwork or sign any of the papers that the IRS has sent me. We can just do this whole thing face to face. I give him a voided check and fill out a form, and he gives me the (unbelievable) news that I will have to pay a $52 fee to set up the payment plan/ direct withdrawal. And, it will take the IRS at least two months to set up the direct withdrawal, so during that time I'll have to run my checks in person down to the local office on the first of each month.


December 5, 2008 - 1 hour later: I had just gotten home from the whole ordeal and was relaxing with a cup of coffee. (Remember this whole thing was extremely emotional as the short sale of the home was due to divorce and foreclosure.) I told myself at least it was over with. Phone rings. It is IRS Representative #1. He says, "You have to come back down here right now!" His tone is full of panic and that makes me panic. (When you've been through a financially devastating divorce, as I have, it doesn't take much.)


"What's wrong?" I ask.


"There's a problem with your check!"


"What?" I was sure there was no problem with my check, and since it was just a voided check there couldn't have been a problem with insufficient funds. "What's wrong with it?"

"You need to get down here right now!"


Okay - even in my panic, I could tell that this guy had no right to order me back down to the IRS office in the middle of a work day. "I'm busy now," I said. "Why, specifically, do I have to come back down there?"


Silence. After a few minutes of talking with him, I finally asked, "Did you make a mistake with entering my check into the system?"


It turned out, he had! And he had the nerve to call me and order me back down there without apologizing or explaining what had gone wrong. Talk about use of power to intimidate!


December 6, 2009: I make a second trip to the IRS office and deliver a second voided check.


December 29, 2008: I drop my first payment off at the IRS office.


January 22, 2009: I get a notice from the IRS that states, "Your next payment of $40.00 will be automatically withdrawn from your checking account on March 1, 2009." I feel relief - everything is set up and I won't have to worry anymore!


February 1, 2009: I drop my second payment off at the Providence IRS office.


March 1, 2009: I notice that $40 has not been withdrawn from my checking account. Something may be wrong....


March 3, 2009: I go back down to the Providence IRS office, by this point rather frustrated and annoyed. I ask to speak with anyone but IRS Representative #1 who I have now realized is incompetent. The receptionist sits me down with a very competent looking woman. The woman, IRS Representative #2, looks at my account. She's puzzled. Evidence of my payments is there. My checking account information is there.

"Hmmmm," she says, taking my certified letter from me. She goes to talk to a supervisor. They figure out that because I hadn't signed the paperwork agreeing that the debt was rightfully mine, the IRS will not begin the automatic withdrawals.

Arrrrrrggggg! This was the very same paperwork that IRS Representative #1 looked at on December 8th and pretty much told me I could throw away. He definitely said I did not need to sign it. Now, three months later, I sign. Representative #2 says she will fax it to the appropriate office and I should be all set. She advises me to just check if $40 is withdrawn from my account in April. If it doesn't work in April, it will work in May. Also, if it doesn't work in April, I can just mail the check to the local IRS office. There's no need to trek all the way down here over and over again. That's ridiculous and IRS Representative #1 should have told me that. Oh, and while I'm here on March 3rd, I make another $40 payment.

March 30, 2009: I get a letter - a certified letter (yikes!) - from the IRS. It states that it is a "notice of deficiency" and names a court date!!!! I am now panicking. I thought that this had been resolved back in December! Plus, I've been making regular payments - now totaling $120.


April 3, 2009: I notice the set-up has not taken effect yet, so I mail a $40 payment to my local IRS office.


May 3, 2009: I notice that the $40 has, once again, not been withdrawn from my account. I decide to mail a check and wait.


May4, 2009: Great news! I get a letter from the IRS that my 2006 account has been changed - I now officially owe them $714.40 (this reflects the original amount minus the $120 that I paid between January and March, plus the interest and fees). IRS Representative #2 had been right - it was apparently necessary for me to sign that paperwork, indicating that I acknowledged the amount owed as accurate.


May 20, 2009: I get a letter from the IRS inviting me to set up a payment plan with them. Here's the catch - there will be a $52 fee!!! I am a healthy 31 year-old woman, but the way my heart raced when I got this notice, I thought I might need to call an ambulance. I had already paid $52 - in December - to set up the plan! I decided that it may have just been a processing error - I would wait to see if the $40 would be withdrawn from my account on June 1st. After all, I'd been assured in DECEMBER (and then again in MARCH) that I was all set.


June 1, 2009: Nope. No money withdrawn from my account.

June 4, 2009: I call Representative #2 to ask her about this. She does not return my call.

June 5, 2009: I wake up early and am first in line at the IRS office. The receptionist tries to send me to still a third representative although IRS Representative #2 is sitting in her office without a client and I can SEE her from where I'm standing. I insist on seeing either her or her supervisor. IRS Representative #2 takes me into her cubicle. She pulls up my file again and examines the paperwork I've brought. We both realize at kind of the same time that IRS Representative #1 had not put the original $52 towards the fee to set up an automatic withdrawal, but rather had put it towards the amount I owed. Utter incompetence.


So, here I am, six months later, assured that this will work for July 1. IRS Representative #2, to her credit, was really just undoing the first guy's inaccurate information and inability to use the computer system to set up a payment plan. But on that last day, I sat in her office close to tears, my hands shaking and I said to her, "I have a master's degree in English! I'm good at reading forms and letters. I'm organized and honest. Why is this happening to me????"


Don't get me wrong - I know that having a master's degree doesn't make me incapable of making errors or misreading. But this situation has been so bewildering and stressful, if I weren't a good self-advocate, I think I would have just given up. How is someone with lower literacy, and/or less time, and/or less self-confidence supposed to deal with an organization where a representative can't even accurately set up a payment plan? I mean, your cell phone company can do that in about fifteen minutes! You can even do it yourself on-line for most large utility companies! The level of complexity and the amount of time and effort that this has taken is shameful. I have been trying to pay! Trying to do the right thing! I have probably spent a total of 15 hours just trying to get a payment plan set up. Not to mention the frequent trips downtown, the need to pay for parking, and the couple of times that I took time off from work to meet with these people.


The IRS mission statement is as follows:


Provide America's taxpayers top quality service by helping them meet their tax responsibilities and by applying the tax law with integrity and fairness to all.


In this case, mission failed. And, yes, IRS reform is desperately needed.

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