(warning: lengthy post)
At the risk of getting audited yearly for this post, I felt it necessary to share this story and give hope to the millions of you out there who wait and wait and wait to file those taxes. (or at least the three who read this)
In 1996, BN and I were audited.
It all started when in 1998 we received a phone call from a collection's agency. We were very surprised to find a dollar amount in collections. After several phone calls and many transfers, I spoke with a grouchy old thing who informed us that we were audited by the IRS for our 1992 part-year tax return, on which I made a mistake, and owed the IRS $98. I was informed that the IRS was not able to contact us in 1996 and that we were sent to collections and we now owed just over $398!
Luckily, I keep all tax records for the suggested seven years. I still had 1992 in our fireproof safe. I pulled it out and went painstakingly through the form again. Have you ever filed a part-year tax form? It's a bitch. I found my error and actually noticed a second error. I didn't claim the "renter's credit" that I should have. Had I done it correctly, the IRS would have owed us a little money. What to do, what to do?
I contacted some IRS helpline. Guess what? Not helpful. So I contacted the legal liaison we had available to us through our employee benefits. They got me in touch with somebody legal in California and this person, this lawyer, said I could try to appeal but I probably wouldn't get anywhere with it and would have to pay anyway. Problem is, I'm hard headed and head strong. Think of me like a bull and be damn sure to get out of my way when I am wronged.
What did I do? I used a skill my Mom taught me. My Mom has this thing she does where she looks, on all accounts, to be very sweet and accommodating, while unbeknownst to you, you are really being reduced to a pile of shit. Have you ever heard the phrase, "Well, Bless your heart." If so, you've just been shit on.
So, I wrote a very "courteous" letter, two pages in length, explaining to the IRS just how easy it was to actually locate BN and myself (this is the dog dooky part). You see, in the years 1990-2000, BN and I were on the radar, so to speak. We were in the Navy, him 6 years, me 4 years. While BN was finishing those last two years in the USN, I was working for the Department of Defense. I used veteran's benefits (GI Bill) to assist with college expenses. BN also used the veteran's GI Bill. Each year I filed income taxes, both state and federal, with the IRS updating our address. The Navy, the DOD, and the GI Bill are all tracked using a little number that the IRS knows quite well. It's called our Social Security Numbers or SSNs.
I spent two pages explaining this to the IRS and then I wrote a check for $398 and sent it "in good faith" to the IRS with all of our particulars to ensure that not only did I get a return check for $398 but also for the additional $42 they owed me (remaining renter's credit). I didn't ask for interest and collection fees from the IRS on that $42. Nope, I just wanted my due amount. A check for $440 and a letter rescinding the collection and debt on our credit reports.
Just two short weeks after I sent this letter and "good faith" check, we received a check from the IRS for $440 and a letter explaining that we were in good standing with the IRS.
Don't let the IRS become a three letter word. Don't give them that power.