In her first year as a divorcee, Babs*, was terrified of the entire tax process. For 37 years her husband had handed her a blank 1040 form and told her “sign this.” That was the extent of her involvement. Now, along with many new found freedoms in her life she found herself free to stress out over whether or not she would make an error filing her taxes. It definitely wasn’t easy to try to get up to speed on tax law in just a few weeks. It was way too complicated. She decided to go to a CPA and let him guide her. Since she was receiving “maintenance”, the new term for alimony, she had an income with no withholding. This resulted in a pretty large tax bill. Babs wasn’t that upset about sending in the check. She was just glad that the ordeal was over.
One month later Babs received a letter with the IRS return address. They were writing to inform her that an error had been made in calculating her tax burden. She had paid in $2700.00, but she really only owed $789.00 and therefore they had sent her a check for the monies she had overpaid. Babs wasn’t the type to go out and spend the money without investigating the matter fully. What if they came back and said they had made an error themselves and she really did owe the money? The explanation the IRS provided seemed pretty flimsy. So, she decided to call the helpline and get some answers. After waiting on hold for over 30 minutes she was connected to Agent Marvin*. He identified himself with a long series of numbers, but she didn’t write them down. She didn’t think that was necessary. After an amiable chat with Marvin, who patiently went step by step through the return with her, Babs felt reassured. It did appear that her CPA had made an error and that she really was entitled to the money they had sent her. Marvin thanked her for being so thorough, but told her not to worry anymore. Everything was fine.
Of course, it wasn’t.
Once Babs had spent her money she received another letter from the IRS. This one informed her that now it would seem that THEY had made an error. And now she would need to repay them the money. This was just what she had feared. Her friends and family were indignant and sympathetic. Her CPA called the IRS and demanded to know what was going on. Why had one of their agents assured her that she was entitled to the refund? No, they didn’t have the agent’s number. No, they didn’t remember the date that the phone call took place. After going several rounds with the agent on the phone Babs told her CPA “just tell them we will pay it.” She didn’t have the fight in her. Anyway, the IRS wasn’t exactly the type of agency one would want to antagonize. Not when she would be dealing with them until she died. She didn’t know if they had blacklists, a file of all the taxpayers that had pissed them off and who they would now “randomly” choose to audit for every tax year henceforth, but she wasn’t taking any chances.
For the second time she mailed the IRS a check.
Then the third letter arrived. This time they claimed that there had been errors on both sides, but that it seemed that the account had finally been straightened out. When the dust had settled it was clear that she was indeed entitled to that refund. They thanked her for her patience. Please find the enclosed check for the amount that they owed her. She pulled the check out of the envelope and looked at the amount.
*Names have been changed to protect the innocent.