Day by Day Cartoon by Chris Muir

Sunday, August 2, 2015

IRS rant

I know it's worthless to complain, but:

We files our 2014 tax return in February, using "E-File".

In early March, we got a letter from the IRS telling us our "refund" would be cut roughly in half, from what their E-File system calculated. OK, so we don't get what we expected. Easy come, easy go. We did get the reduced refund, and promptly spent it on overdue bills stemming from my then-recent layoff.

In April, we got another letter from the IRS - they want $2800 for taxes owed on our 2013 return, due to our not listing a "debt reduction" negotiated settlement of a credit card. We never received the 1099 that companies are required to send to people who get settlements like this, but they evidently DID send the information to the IRS so they could determine that we owe more.

First off, when we contacted with the lawyer to negotiate credit cards down, we were not told that any settlement would be treated by the IRS as a lump-sun increase in our income that year.

Secondly, why did the IRS not notice the discrepancy in our 2013 return before refunding almost double what we "owe" to us for 2014? I thought they deducted unpaid taxes from refunds.

I'm beginning to understand why some people go nuts.

To top it off, we recently got notices of MORE "settlements" from that lawyer - he's earning his keep, anyway - that will undoubtedly almost double our income this year, so in 2016 we will have to go into more debt to pay taxes on money we never saw.

There's been much talk of the "Fair Tax" where you pay a set percentage of your base pay to the government. It still will require the IRS to monitor people's personal lives lest they have an undocumented job, and will still require all those databases of American's financial dealings.

How about we abolish the IRS and all income taxes by Constitutional amendment. Make all government live off 5% or 10% of all retail sales exclusive of food, and shrink as needed to stay within budget. Let the various states donate 5% or 10% of their tax income to the federal government. The feds should never be bigger than 1/10 of 1% of the economy, defense included. This will provide a long-needed positive feedback mechanism for the government to actually help grow the economy rather than impede it.

Of course, this will mean a wholesale deconstruction of the federal government, and the layoffs of millions of useless drones, who will all go on unemployment until it runs out. Since all "entitlements" would also end, these drones would have to learn useful trades or starve.

Beautiful image. I won't hold my breath.

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