How To Negotiate A Severance Package

How Tax Collectors Like The IRS Cleverly Rob You Of Your Money

Action Figure In HKEvery IRS person I’ve spoken to has curiously been kind. Yet, despite their kindness, I still feel my heart drop every time I get a letter from them. I’m not sure whether it’s because the movies always portrays the IRS agent as a bad man in a rain jacket, looking to shake down individuals for all they are worth. Or, perhaps it’s the fact it’s little ‘ol you vs. the omnipotent government that presents a no way out scenario. Whatever the case may be, dealing with the IRS sucks.

Those who work at the IRS or State Tax Collectors agencies are actually on your side. Sure, some have mandates from higher ups to milk you dry. However, most are willing to help you resolve your issues because they know how complicated taxes are in America. Perhaps this is one of the reasons why so many citizens have decided to just call it quits and not work!

One acquaintance I know worked for the IRS so of course I peppered him with questions to extract all the juicy details. I am against anybody paying more taxes than they need to. It’s just not right for the government to tax more than a typical person saves a year. If the government could show they can efficiently spend our money, then fine. But, they can’t even come up with a darn budget so forget it!

For all you conspiracy theorists out there, I think you’ll really enjoy this post.


Here is some straight up feedback from an acquaintance I met who spent years at the Ogden, Utah IRS center.

* “They are always watching me. My phone is always being recorded.”

* “I feel so sorry for everybody who calls in. They have no clue what they are doing on their tax forms, and frankly, I have trouble helping them too because it’s so damn complicated!”

* “The government is very smart for adding an extra 70,000 pages to the IRS Tax Code since its founding in 1913. How else can the government payback all the accounting and financial planning lobbyists who took them out for steak dinners all these years? Tax help is BIG business!”

* “We really are on the people’s side. Nobody is going to jail for screwing up on their taxes because we understand. 99% of the cases end in simple fines. Only the most outrageous tax evaders get locked up, so don’t worry!”

* “Shit, they don’t pay me enough to do this!”


Now that you’ve got some background on how one IRS agent feels, let me share with you a short story of my recent dealings with the New York state tax authorities.

Earlier this year, I got a letter in the mail from the New York State Department of Taxation and Finance. I was perplexed since I live in San Francisco, so I decided to give them a call just to make sure it wasn’t some scam. Money scams are everywhere, so one can never be too careful.

I dialed 518-485-9094 and got through to a friendly gentleman on the first try. It felt like I won the lottery because if you call up any government agency in California, you’ll be lucky to get through after the 10th try! Anyway, I asked him to explain the letter saying I earned taxable income in New York State in 2007 and that I owe state taxes. That’s right, they are asking me for money from five years ago!

He basically said my company withheld NY State income in 2007, which gave notification to NY State that I therefore must have earned income in New York. This is obviously not the case because I spent a total of four days in New York State that year, only three of which was spent in the office. I don’t know what the exact rule is, but I definitely know that if you work less than 10 days in New York, you don’t have to pay New York State taxes.

I called up my company to get clarification for my 2007 W2 and they sent back a 2007W2C (Correction). From there, I sent my documentation and reasoning as to why I don’t owe NY State taxes as a California resident. I called up the NY State Dept of Taxation again to ask when I should be expecting a REFUND! That’s right. If I erroneously paid NY State income taxes, I should therefore get my money back right? Right?! Wrong!


The friendly NY State Dept of Taxation employee mentioned that one must file an amended return or appeal within three years in order to get any money back from the State or Federal government! I thought this was absolute horse crap since they sent me a letter FIVE YEARS later asking for an explanation on my taxes! How am I supposed to file an appeal within three years if I don’t know I am being robbed until five years later?

Incredulous, I looked up the IRS statue of limitations on how far back they can go to audit your tax returns and it does say three years. See below.

Generally, the IRS can include returns filed within the last three years in an audit.  Additional years can be added if a substantial error is identified.  Generally, if a substantial error is identified, the IRS will not go back more than the last six years.

The IRS tries to audit tax returns as soon as possible after they are filed.  Accordingly most audits will be of returns filed within the last two years.

If an audit is for an older year, you may be requested to extend the statute of limitations for assessment of your tax return.  The statute of limitations limits the time allowed to assess additional tax.  The statute of limitations is generally three years after a return is due or was filed, whichever is later.  There is also a statute of limitations for making refunds.

If the audit is not resolved and the statute of limitations date is nearing, you may be asked to extend the statute of limitations date.  This will allow you additional time to provide further documentation to support your position, request an appeal if you do not agree with the audit results, or to claim a tax refund or credit. It also allows the IRS time to complete the audit and provides time to process the audit results.

You do not have to agree to extend the statute of limitations date.  However, if you do not agree, the examiner will be forced to make a determination based upon the information they currently have.  Therefore, the examiner may not be able to consider additional adjustments, such as expenses, that could lower the amount of tax due.

They say three years as a statute of limitation, but then they put in all this vague language to allow them to send audit notices way later! I could tell the NY State Tax employee was on my side, and I almost got him to admit to the hypocrisy of the rule, but he caught his tongue when he remembered that his line was being recorded by Big Brother!


I’m sure the NY State Tax Department was hoping to extract more money from me once they sent the notice. Instead, their plan backfired because given I am a California resident. I am owed thousands of dollars back from New York as my company erroneously witheld some money for NY. But, will the tax department pay me? Nope, because it’s past the three year statue of limitations to file an amendment. My company’s hands are tied as well.

Even though NY State is violating their own guidelines by sending an inquiry five years later for more money, I can’t get any money in return. Let’s say I actually did owe money, then of course I must pay back taxes even though it’s beyond three years! The traffic flows one way.


My case clearly demonstrates the government’s menacing authority over its citizens. The playing field is NOT the same. It’s like going into the arena to fight Megatron. You will die if you don’t kneel down and obey!

The government and the people who rule the government need you to fall in line. They use tax policy to control people’s behavior. The only way out is to stop making money so you can stop paying taxes. For the love of strawberry cupcakes, please stop supporting big government. The government is brilliant for creating a 70,000 page tax code bill so mistakes are made.

Once you make a mistake, they wait for YEARS to send you a notice telling you why you made a mistake. Along the way, they charge an interest penalty 50X+ higher than what you would get in a savings account. If you don’t pay, you will be fined further until they eventually throw you in jail for not complying.

Open your eyes people. The Borg will crush all of you if you are not willing to fight for your financial rights! Even the people working for the Borg are afraid! So what does that say about the whole system?

Related post:

How To Pay Little To No Taxes For The Rest Of Your Life

Recommendation: I’ve been using H&R Block’s Premium Tax Software to do my own taxes for the past 11 years. It’s inexpensive and very easy to use for novice to advanced tax filers. The software always updates with the latest tax rules so you’re never behind. They also have audit protection service as well.

Photo: Jitsu’s Chop In Front Of Hong Kong Bay. Updated on 4/14/2015.

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship. Sam focuses on helping readers build more income in real estate, investing, entrepreneurship, and alternative investments in order to achieve financial independence sooner, rather than later.

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  1. says

    I haven’t had any trouble with big bro because I had a boring corporate job for the last 16 years. The tax was pretty simple, but now that I’m self employed, I expect the tax to be much more complicated. The chance of getting a call from the IRS is going to be higher than before. I’ll need to be very careful when I do tax next year. I hate doing tax, it usually takes me 2-4 weeks, but I’ll see how my small business and rentals are really doing. Perhaps it’s time to hire a pro…

  2. Eric says

    I have had numerous tax claims from varying states due to assignments all over the country/world. I was lucky to learn that as of 2006 I was not supposed to pay state taxes and got all but 1 year of overpayment back. It took nearly 9 months to receive my checks for the errored returns however. I have found both the tax departments in MI and VA to be extremely helpful and forgiving of the errors they made.
    If you want a great story look up some of Rush Limbaughs dealings with the NYS Dept of Taxation. They are some serious vultures. Its an extremely convoluted tax system there as well, much like CA I imagine.

  3. says

    I too have gotten the letters – but not since college, when I had income from three states (Rhode Island, Massachusetts, and California), and barely enough between them to even have to pay tax (ha). We got it sorted out, but I think cases like that with student incomes must barely break even, if at all. They’ve got to make it back somehow – so why not comb through the archives and collect pennies from the past?

    • says

      I think tax collectors count on many people to just freak out, roll over, and pay. Costs them nothing to mail out notices. If the owe a refund, we can’t collect either due to statue of limitations.

  4. Travis says

    This is why we need something like the Zero Plan. It takes out ALL personal tax credits and deductions. No more getting to use our tax code for social manipulation. Since there are no more deductions, the plan calls for three income tax brackets: 8%, 14%, and 23%.

    A married person with two kids that makes $200,000 a year while paying on a $400,000 mortgage will pay the same exact amount in federal income taxes as a single person with no kids that makes $200,000 a year while renting an apartment. Two people make the same amount of money, they should pay the same exact income taxes. Marital status, number of kids, charitable contributions, mortgage interest…none of that should matter.

    Also, by cutting out the credits and deductions, tax returns become incredibly easy. Everyone from the $12,000/year burger flipper to the $12,000,000/year hedge fund manager will be able to fill out a one-page tax return. I know tax lawyers and accountants won’t like this, but I’m sure not too many people will shed a tear over a tax lawyer losing his job.

    One change I would make is to add a 0% bracket. As much as I want everyone to pay in at least 8% to the federal tax system, I know some people simply cannot afford to do so. If we had a 0% tax bracket up to the poverty line, then increase the three tax brackets by 1-2 percentage points, that might be structured a little better for low-income earners. Of course this means they don’t get their EITC or child tax credits any longer, so NOBODY gets a tax refund that is higher than the amount they paid during the year.

      • says

        There are so many industries that live and die on the tax code that you’ll never get real reform. Realtors, bankers, solar power companies, automakers, manufacturers of all types, contractors, etc. all have their hands in the tax code.

        Real reform won’t happen just for that reason. It’s sad but true; just over $3 billion in ad spending bought control of a $3 trillion+ government budget for at least two years.

    • Richard of Liberty says

      Travis, sorry to say…8, 14 and 23 are still not equal(I like 0% though:), which takes more from some and less from others…still not fair and it breeds division.

      The income tax was not designed to tax the citizenry that had just created a new country over taxes and religious freedom. It was designed to prevent foreign financial influence. It was created primarily and almost exclusively for 4 Entities:
      1. American companies doing business outside America getting foreign money…You owe uncle Sam.
      2. American citizens doing business outside America getting foreign money…You owe uncle Sam.
      3. Foreign companies doing business inside America getting American money…You owe uncle Sam.
      4. Foreign people doing business inside America getting American money…You owe uncle Sam.

      5….It was NOT designed for American citizens doing business inside of America getting American money from American companies…You DO NOT owe anybody a dime. They made their money from import and export tariffs. Soak that in…and read(if you can find it) Income Tax : Shattering the Myths, Authored by Dave Champion and published by Dave Champion(I wonder why…).
      It makes NO SENSE that our founding fathers went running back into the arms of despotism and decided to tax it’s citizenry, yet it makes PERFECT SENSE that in our recent generation 99% of our citizenry’s tax research has been to do what Mom and Dad did and just sign the damned W4.

  5. Money Beagle says

    That’s interesting and I can see where it’d be frustrating since the rules are different for them but it doesn’t surprise me. I’ve luckily never been audited or contacted (knock on wood) about any tax returns I’ve filed.

    I do laugh because at one point I worked in the city of Detroit, and they way it works there is if you live there, you pay 0.75% city tax and if you work there, you pay 0.75% resident tax, but for any employer that does withholding, they have to take out the full 1.5%. If you’re a non-resident that means you get back half of what they took out. But, good luck getting that in any sort of reasonable fashion. I think I waited 10 months one year to get it, and that was in 2006, when the city was actually in better shape than it is today. Yet, if you filed even a day late, I’m sure they’d be all over you to collect any fines and such.

  6. Jon says

    I haven’t been screwed by the IRS thus far (knock on wood), but have been frustrated with them many times. There were 3 years in a row that they made the same mistake on my parents’ Federal tax returns because my father was serving as a missionary overseas, and they didn’t properly account for that. So, I had to make the exact same phone call 3 years in a row when they claimed I completed the tax return incorrectly, but in fact they made the mistake.

    Other than the insanely long wait times to actually talk to someone, it drove me a bit nuts that THEY had to pay interest on the refund they owed; wish they could just get their processes in order and use that tax money for something useful.

  7. Matt says

    Great post, Sam. This really connected with me, and leads me to two comments:

    First, I also had to play the “avoid New York” game, and was always careful to keep my days there less than 10, even though my company has 2 facilities there. I’m sure it’s to catch the stockbrokers and whatnot, but what a pain!

    I also wanted to point out a subtlety in your IRS quote of the statute of limitations:
    “The statute of limitations is generally three years after a return is due or was filed, whichever is later.”

    I would emphasize the last phrase, “…whichever is later.” I had a co-worker in Indiana who ended up in a real mess, because the Indiana Department of Revenue cashed his check, but never filed his taxes. Several years later, they came back for him after a routine license transaction with the state. Even though he had done everything right, and they acknowledged a problem with their employees’ behavior at the time, the burden was on him to reproduce all of the documents and to re-file his taxes. Guilty until proven innocent! This was after 6 years, but because the taxes were never filed, they claimed the statute hadn’t even started yet. Maybe you could take another crack at New York with the same logic, and file a $0 tax return looking for a refund.

  8. says

    My friend was married to an accountant, and every year he filed their taxes, the IRS came after them. So, if you have a friend who is an accountant, make sure they are in TAX and not AUDIT before you let them do your taxes for you!

  9. says

    I sent my NYS tax return in back in 2005 and I owed like $400, I included the check with the return paper clipped not stapled as they requested. Several months later I got a letter indicating I owed them like $1,000 in taxes, penalties and late fees. The got my return, but no check, they never thought they lost it had to be my fault for not sending one, for this they decided to charge me an arm and leg in fees and interest.

    My accountant wrote them a very nice letter for the low cost of $50 and NYS decided to let it go this time, however if in the next 2 years I had any errors or late payments the fines would be reinstated and additional interest would be charged.

    Here is another useful piece of information, if you get a letter from the IRS it is just a random audit and dumb luck, if a single IRS agent ever shows up at your door they are auditing you for something they suspect and can likely recover funds from, if 2 agents show up it is the criminal division and you are going to be arrested…. Don’t ask how I know this, but consider yourself warned… For the record I have never had an IRS agent show up at my door on official business.

  10. Anastasia says

    In a former life, I was a successful tax preparer in the state of California. There are so many laws and loopholes! I can only compare it to a complex game for those who have good memories, like ace spellers and those who can memorize insanely trivial details. Long story short, I had no fear of the IRS (just a healthy respect for the “bachelors”, lol) but all that has changed. Living as an expat entrepreneur, my personal sentiment is to keep in the game (get US income with tax returns each year) but stay as far away from the fire as possible. Thanks for your meaningful post, definitely struck a chord.

    • says

      I’m, u might have it real good. Even if you get an erroneous Multi million dollar refund, you won’t get punished because you are out of the country!

      I wonder if a lot of people do this. Big loophole?

  11. says

    So far, no scary IRS stories. In the 80s, I received a standard office audit request. My neighbor at the time was a former IRS prosecutor in the White Plains, NY court. I asked him what to watch out for etc. He said unless two IRS officers come to my office, don’t worry about it. He used to prosecute modern day “Al Capone” people. They were big time criminals and the only way to get them was through tax court similar to AL Capone.

  12. says

    My pulse races everytime I see an IRS envelope in my mailbox. Fortunately I was able to sort everything out fairly quickly. I’ve had to send in forms and such and have called their customer service a few times. I was also suprised how nice everyone was and super helpful. I never would have guessed that either given people assume the IRS is evil because they are always taking our money.

  13. Catie says

    Ah… the end of year and the thoughts of taxes. Interesting enough my VITA (Volunteer Income Tax Assistance) training books arrived yesterday. Yes I volunteer thru AARP to prepare taxes for anyone who is willing to stop by with all of their paperwork at one of the sites.

    I haven’t had any run ins with the IRS… yet… odds are, there might be a day. But I think I am prepared should it happen. I have assisted family and friends who have gotten the ‘letter’ and have been successful in satisfying the gov’t without penalties. I feel for all those folks who have gotten stuck in that arena.

    As usual Sam, interesting article. I enjoy reading them.

      • Catie says

        Day job is within the IT field at a major bank. As for helping you one day… well this clientele doesn’t have your knowledge of finance. It is my hope that with this knowledge I will also be able to one day disappear from the grid.

  14. not using real name says

    Got the nice lil IRS invitation to join them in the Federal Building to look over tax returns from three years ago, we had rental property and extra medical bills, i am sure the medical deduction triggered an audit. So be careful with those. I got our money back the next year with extra deductions. Ha take that IRS! Had to pay around 3600.00. My husband still want to remind me of it every April though. I do pay extra for audit defense tax software programs.
    but I just went in myself, took the paperwork. Oh, another thing i got dinged for was not declaring a stock I sold on sharebuilder. I think I made $50.00 on the sale. I think the guy had the decency to look embarrased for that one. I had to pay $10.00 to park, still makes me mad!

    • says

      Glad u got some money back! Ridiculous on the $50 sale they were nitpicking!

      A part of me wants to sit down with an auditor so they can review and do all my taxes for me and get me more refunds! On second thought, what a PITA

  15. says

    Oh errgghhh … it’s the same in Australia – they go back YEARS. A few months ago I got picked up on a mistake I made 4 years ago. I asked them why did it take 4 years and the woman just said they are allowed to go back that far. Some of them, despite being govt employees, get bonuses based on the extra tax they drag in. Also, they charged me interest for those 4 years! (not fair in my mind) AND the interest rate is 11% – who gets away with that?! – well credit cards I suppose – but they are the Government! Ripped off in my mind but no recourse cause the public servants got this into their tax legislation years ago.

  16. says

    I have an employee who didn’t file a tax return for 7 years. At the time she was a sales rep and worked on commission. She knows it was wrong. She was young and stupid. She says the first year was kind of an accident, but then when they didn’t come after her, she thought why bother. At year 7, they came after her with a vengeance, draining her bank accounts and sending threatening notices. When she came to work for me, she was a mess and paranoid. After spending quite a bit of money, she got a CPA to file all seven of the returns plus the current one. They set up payment plan of around $300 a month. I believe she owes around $20K, but most of her monthly payments go toward penalty and interest. After the first year, they automatically raised the payment. I believe they are taking $600 a month now. They automatically debit it from her account. She doesn’t make that much. She works for me in the day and waits tables at night to earn extra money. About 6 months ago, her dad agreed to loan her the money to try and make a settlement. Wow, what a rip. She, with the help of her accountant, proposed to pay $10K as a settlement. She had to send in 20%. After all this time, I get a text from her a couple of weeks ago that they accepted. She was extremely happy. The next day, her accountant got a call from a different person at the IRS saying that the person above the person who approved it was now denying it. She does not get her 20% back and they are going to keep taking payments. She is very distraught. She hides money in her dryer because she’s afraid the IRS will drain her account at any time. She admits to the wrongdoing, but holy crap, she’s going to die still owing the IRS. They are like terrorists. I’d love to help, but I have no idea if there is a way out for her.

    • says

      Wow….. 7 years of not filing tax returns seems a little excessive, especially since she knew what she was doing was wrong.

      It might be actually lucky that all she has to do is pay $20,000 back to the IRS. That’s willful negligence.

      It is unfortunate she couldn’t make a deal for half off. Where there is a will, there is a way, and I’m hopefully she will pay everything off well before.

  17. Serife says

    I’ve heard that because the IRS is not a government agency (it is a private company), and because it was initially formed illegally (required a higher percentage of states to ratify it than they actually got), they actually have no legal grounds to take money from any individual. I don’t know if this is true, or what legal hoops you’d have to go through if you refused to file and/or pay. But I find it interesting how much power they hold over us and our sense of well being.

    • says

      This is completely not true, the IRS is part of the Department of Treasury and under direct supervision of the Secretary of the Treasury. Ask anyone who is an employee of the IRS there paycheck is signed by Timothy Geithner the current Seceretary.

      There have been many lawsuits trying to claim the IRS is not a goverment agency and they have all been rejected overruled or simply denied.

      Read this it list various court rullings that have shown the IRS is valid and has the rights to perform its duties.

  18. Mike Hunt says

    Maybe they wait a few years to ensure that the penalties and interest fees will add up… those tricky devils.

    Since I’ve been working overseas in a country that has higher taxes than the US Federal taxes, I suspect I’m safe. Can’t squeeze blood from a stone. The rates here have not been indexed for inflation in the 7 years I’ve been here…WTF! Anything above $3.5K is taxed at 10%, then above $16.5K 20%, above $33K is 30% and above $133K is 37%. The tax form is one page, with a small standard deduction and some other deductions (donations up to 10% of income, some retirement funds, life insurance and a few others)- effective tax rate always ends up being around 30% or so…

    Boy, taxes can sure get you fired up!


    • says

      That’s exactly what they due, to charge penalties and charge interest rates 50X higher than the national average.

      I always become a little less agitated when I hear 37% tax rates for incomes over $100,000 and in your case, $133,000 in Thailand. At least you don’t have 8-10% state tax!

      • Mike Hunt says

        Yes, no state tax. Nor medicare nor Social Security… The 30% rate above $33K is pretty freaking steep, look up what the equivalent is in the USA- much, much higher.

        And you get NOTHING back for that high tax rate… Singapore & HK are the better places to make money but the cost of living is higher and then you will have to pay US taxes since the tax rates are so low.

        It is hard to find the best of all worlds situation, that’s for sure.


  19. says

    Our tax code isn’t going to get any easier to follow. As you said, the tax preparer lobbyists spend so much money on making the code difficult to follow. Any talk of making the code easier and removing loop holes is just posturing on the politician’s part. They receive too much money from them to actually want a change.

  20. says

    Now, you and I are on the same boat, Sam! Several years ago, my accountant miscalculated sales tax for a monthly return filed with the State Revenue department; the amount was mere $145 or so. I ended up paying $3000+ after several years of interest and penalty. I salute those who think our government can fix all of their problems.

  21. Darwin's Money says

    That is a pretty frustrating irony. I look at a rule like that as nothing more than typical government money-grab bureucracy. I love all the little death by a thousand cuts taxes. A little new 1% local tax here, a little new Obama tax there; it never ends. Once the government gets their claws in something, you never get it back.

  22. says

    The term frustration doesn’t even begin to describe such an experience. About as exasperating as hearting a campaigning politician bloviate about tax “reform”, as if such a fantasy could ever come to pass.
    Our taxes are fairly straightforward, but I have a couple of friends who have been through audits. One keeps meticulous records, and got through relatively OK except for the time wasted. The other wasn’t so fortunate. It took him the better part of a year to get everything sorted out. Stealing money at gunpoint is hard work.

  23. says

    Oh, taxes. I haven’t received any notices, but when I had my business, I was always scared of making a mistake because I received “revenue” from all states and had to pay sales tax in multiple states. It was a nightmare to deal with the taxes. I am sure I will get something one day.

  24. says

    My stomach drops anytime I get a notice from NY State or the IRS. I have had a few penalties but I never even look into it I just pay since the amounts were small…leads me to the question how many other people just pay it also?

  25. renae says

    I work in the tax industry and I’m not worried about my job going away because of a simpler tax system. The biggest reason the US will never have a simple tax system is because the government uses it to encourage certain things – tax credits for education and first-time homebuyers are a few examples. And don’t forget the making work pay credit ($400 for single, $800 for married) that we were supposed to spend to improve the economy. Coming up, they are using income tax forms for payment of penalties for people without health insurance under the new healthcare reform. And on and on it goes. . .

    • says

      I noticed it, but NYS tax is always withheld and then refunded. This time, NYS decided to send me a letter asking me to pay MORE NY taxes. They never did this before. It’s also not a coincidence that 2007 was a big income year. They are being greedy.

  26. says

    Here is the thing. Tax codes whether they be federal or state are built for compliance. When taxpayers fail to pay timely interest and penalties run. And the rates are higher than anyone can get at a bank or a financial institution. Normally, the statute is 3 years but in certain cases it can be 6 years (substantial understatement, 25%) or indefinitely if for fraud. These rules have been on the books for years.
    Each year stands on its own under tax codes. If one fails to seek a refund on a timely basis it is gone. I cannot tell you how many new clients I have had who never bothered to file returns with nothing more than paycheck income who have lost refunds merely by failing to file such returns ( and to offset tax due years by the closed refund years).
    The rules you mention just scratch the surface of some of the draconian penalties the IRS and state taxing authorities can assert. For example, the failure to file, not the failure to pay mind you, can result is a 25% penalty. Now, all the taxpayer has to do is file the return without paying 1 cent to avoid this penalty. Rule #1 in the tax world is to always, always file your return by the due date or extended due date even if you cannot pay a thing.
    My point to all this is that you are right in many of your comments but there are just so many simple things that can be done to avoid many of these problems. Sadly our financial and tax world is complicated and to avoid these problems it helps to know the rules of tax engagement and to have a good accountant, CPA or tax attorney to keep you compliant.
    I know this stinks but with the interest and penalties at issue, it may be well worth it to have assistance. Just one dumb tax attorney’s opinion.

    • says

      Thanks for stopping by Steven. I will absolutely ask for help if I reach an impasse with future taxation issues. I don’t expect any difficulties given I’m on my taxes like a hawk every single year. I’ll stay vigilant!

  27. Michael says

    Taxation is theft. Tax attorneys should be focused on helping clients pay as little as possible through ANY means. Offshore leasing agreements. Shell corporations. “Deductions”. As little as possible. Zero is optimal. Ultimately the client assumes all risks. Yet instead, all todays tax attorneys focus on is compliance and veiled intimidation. Show me one tax attorney thats on my side. It’s almost like they work for the IRS and not the client. Attorney client privilege. Ever hear of it? Stop encouraging compliance and focus on your clients. GE made billions and did not pay any taxes. I doubt the GE lawyers spent their billing hours scaring GE into quivering compliance with the IRS maze of laws. Stop consulting me on consequences. Someone get me a tax attorney offshore I can have a REAL consultation with under attorney client privilege without the fear of being reported under the new Obama laws.

  28. kalyan says

    In year 2012 from Jan 10 to Dec 31 worked and stayed in PA State, before that from Jan 1st to Jan 9th worked in NY state at same employer but my employer had reported total federal wages showed in NY state wage and tax withholding reported very small amount which i paid at pay check, in addition to reported PA state wages and withholding as per my working days.

    how to compute NY state tax return?

  29. sj says

    Right now this moment the IRS owes me 3 years of income tax returns which brings my total to 19,775.00. The IRS has tied my money up fradulatly giving it to this place , putting down false places that never existed saying I worked under the table when it’s all lies. They even pulled the card and said I owed taxes . This is complete bull shit. I’ve never owed taxes because I know how to do them and I have proof of years of tax papers, and this is pure dam robbery. How can you take a total of 19,775.00 and say this is what your refund is now 4,000.00 and something . This pissed me off and I’m not letting into this so I told the IRS I’m hiring a attorney and we will see how much of my income taxes for 3 years I get back and you will pay my court cost. Always trying to steal so I’d be watching carefully and paying attention to your taxes and refunds and so on and so on . I’m livid that’s my hard earn money not theirs to do what ever they fucking want

  30. Amy says

    I have been separated for 2 & 1/2 years. During the time my estranged husband and I were together, I caved in to his stupid, ” I’m the man of the house…I will take care of finances…”, mumbo jumbo. I let things be, now I recently had to make a payment arrangement with the IRS and just had a levy placed on my financials from the state of California. I have been in Texas for the past 2 & 1/2 years and he has been bouncing from New York and California, making him a former US Marine “untrackable”. WTF???!!! No!!! The fu@$!#/ IRS and California Tax Board are not doing their due diligence to get him to pay as well. I am having to foot the entire bills. He is happy go lucky not a care in the world all while my life is flipped upside down. Peeved as f@$! !!!

  31. Lish says

    I got a letter from the Ohio taxation department in 2013 stating that I didn’t file my 2012 return. I file my return through turbo tax and submitted my returns the same as I had years before. So I was shocked to find out the return didn’t go through. I contacted the Ohio taxation department who advised me I could sign and file for free on there website. After I filed they said I was due a refund of almost $300. I might be wrong but it is my understanding if I am due a refund I paid too much tax money to Ohio. Well now its 2014 I file my federal return and get notice that almost $300 was deducted from my federal return because I owe Ohio taxes. A week after I get my federal return I file my state and I am due refund. I get another letter saying Ohio is taking that as well. How is this possible? How does it make any sense that I paid too much into taxes and still owe Ohio money? I have searches the web for an advice or a way to file a compliant. Any information would help. Thank you.

  32. elaine says


  33. lynn says

    The IRS never even sent me a letter.NY said I owed $9,000 from 2002 !Its 2015 wtf! A lawyer cut me check from a lawsuit. They are claiming I received $22,000.I Gave my bank statements from 14 years ago! I told them lock me up ! I am tired of 14 years later you come to me.Bullshit go get bigger money ! Assholes….


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