This week’s story about the man who deliberately flew his small plane into the Austin IRS offices has struck a chord in many. It brought to my mind the true story I wrote about in 2005. I’ve reproduced the story (three separate blog posts) below.
The man in my tale also felt driven to the verge of suicide, but his despair lacked the rage to direct itself at the IRS.
Wednesday, October 05, 2005
Dealing with a tax levy.
I hope you never have to.
Fortunately I’ve never had the personal pleasure of much contact with the IRS.
Oh, there was that one time about 16 years ago when they questioned one of my deductions. What made it nerve-wracking was they didn’t choose to tell me in the letter they sent that it was a single charitable contribution they were interested in.
NO, they just sent a “Dear Taxpayer” letter telling me to appear in person with all my records for an “examination” of my 1988 return. They don’t use the word “audit;” it’s an “examination.”
I dutifully loaded up a medium size cardboard carton with all my receipts, records, check stubs, bank statements, and on and on. I showed up in the lobby of the Federal Building feeling like a criminal, and cooled my heels for about 30 minutes past my “appointment” time. Shoot, THEY were in no hurry. They knew I wasn’t going anywhere.
When I walked into the examiner’s office and she informed me that all she wanted was documentation on one contribution, I almost wept in relief. Shoot, I had that! And sure enough, within about ten minutes I was skipping out the door and down the street to where I’d parked the car, feeling like a kid just let out of school for summer vacation!
But I’ve never had to face a tax levy. That only happens if you’re delinquent in your taxes, you’ve set up a good-faith payment schedule, and you then fail to make your scheduled payments.
Trust me; you don’t want to do that. It just happened to one of my employees.
No, they won’t throw you in jail. Why not? You can’t PAY them if you’re in jail. They want you to keep your job, and maybe work a second one as well.
But they will obtain a court order to attach ALL or your wages (except, of course, your taxes, Social Security, and voluntary deductions for such things as health insurance and other benefits) and then they’ll let you take home a minimal, fixed amount based on your filing status (single, married) and your number of exemptions. All the rest, however much it may be, they make your employer send to them.
In the case of my employee who files single with just one exemption, he’s allowed to take home a maximum of (get this)... $158 a week! That’s it.
You say you can’t live on that? They don’t care. You say your home will be repossessed, along with your car? They don’t care. The IRS has no compassion.
And guess what? If you take a second job, they’ll levy those wages too. For how long? Until the entire amount you owe, including interest and penalties, is paid.
As this guy’s employer we’d like to be compassionate and fudge for him. But we can’t. It’s a court order, after all. If we knowingly ignore or violate it, I could go to jail. So, sorry Mr. Q. Have fun on $158 a week.
I hope you never have to experience a run-in with the IRS.
POSTED BY DUKE_OF_EARLE AT 5:15 PM
Thursday, October 06, 2005
Nowhere to Run, Nowhere to Hide?
(Martha and the Vandellas, 1965. If you care.)
So what do you do if the IRS levies all your income except $158 a week, and you can’t live on that?
Well, most of you out there who read this are married with family responsibilities. That complicates matters, but it also presents the opportunity for your spouse to go to work, or take a second job to make ends meet. The IRS can’t levy your spouse’s earnings, unless he/she were a party to your non-payment.
Of course, you would also do whatever you could to reduce your weekly expenses. Like car-pool if possible, eat cheaply, and generally live as frugally as you could. You might even sell some things at a garage sale, or trade in that high-payment car for an older cheaper model.
But what if...
You were single with no dependents? You were renting a cheap place by the month because after your divorce your spouse took most of what you had (including the kids) and left you with just the debts and child-support payments?
And what it your car was already an old clunker? And you couldn’t get out from under your debts because of the tax levy and the court-ordered child support — there wasn’t even enough left to set up any long-term payment plans?
And what if there were no way you could borrow any more to help consolidate debts because your credit was already shot? And the only thing tying you to this geographic area was your good-paying job with great benefits — except that now the IRS gets all of your paycheck so the job won’t seem good-paying no matter HOW much you make?
Finally, what if you thought you knew how to get some counterfeit (fake) ID, including a Social Security card?
Would you be tempted to drive your old clunker quietly out of state, set yourself up with a new job somewhere else, and drop out of "the system?”
Sure, the new job would be entry level and low paying, but you’d take home more than $158 a week and you wouldn’t have to worry about all those debts. You wouldn’t be able to marry without your past coming back to haunt you, but you’re not interested in that right now; you’re consumed with fear and anxiety over your hopeless financial situation.
I’m not saying it would be easy. But it wouldn’t be all that hard, either.
It sure is tempting to my employee (see yesterday’s post). I’ve tried to counsel him that “run and hide” is NOT the best option. We’ve discussed the company’s Employee Assistance Program and other “safety net” agencies and programs available locally that might help. He seems dubious.
We’ll see if he stays, or just doesn’t show up for work one of these days. Ever again.
POSTED BY DUKE_OF_EARLE AT 4:18 PM
Thursday, December 01, 2005
Follow-up (Somewhat Unbelievable)
Remember my posts about one of my employees with a tax levy from the IRS?
No? Well, for a quick review check out this post and this post from back in early October.
Okay, now that you’re up to speed, here’s the follow up. (Initials have been changed to protect confidentiality.)
Mr. Q tried to live on the $158 per week the IRS allowed him to take home. After a month or two, when doing so (living) became obviously impossible, he petitioned for a reduction in the amount of the levy. He called the same “1-800” number 6 times over a few weeks, but each time was connected to a different IRS office. As you might expect, he received no help at all from some, and conflicting information from others.
He pleaded with me for help, but I had a court-ordered levy to deal with. I couldn’t ignore it, nor could I stop sending the levied amount to the IRS without written instructions from the IRS. I sent him back to the IRS to ask them for something in writing that I could use to reduce his levied amount.
This week he came to me in tears (a bit disconcerting — this is not a man prone to them). A lady in an IRS office in California had told him they only expected us to be sending them $590 per month on his behalf, and we were sending almost $1,800. She didn’t understand why. She had an agreement, signed by a Mrs. C, which stated the $590 number.
Just so you’ll know; Mrs. C is our company’s payroll administrator. She works for me. I asked her about this alleged “agreement,” and she produced a copy of the only thing she had ever signed and sent to the IRS. It was VERY CLEARLY not any kind of agreement. It was simply a cover sheet that went along with the first check we sent them on Mr. Q’s behalf. That first check had been for $590.
This was no “agreement...” but if the IRS thought it was... and accepted it as such... AND (most importantly) if somebody changed his account records in their computer system to show that they HAD such an “agreement”... Well, all would be wonderful.
Apparently that’s exactly what happened.
Today Mr. Q, Mrs. C and I called the 1-800 number from my speakerphone so we could all participate. We were on hold forever, but then were connected to a Mr. White. He listened to the dilemma, checked the computer records, agreed that Mr. Q had an agreement with the IRS, and only owed them $590 per month!
When I explained my need for something in writing to authorize me to amend the current levy, Mr. White agreed again. He kept us on hold for a loooooong time. Twice he came back on to ask us a question, and then we were back on hold.
Then he asked for my fax number, and a minute later I had my signed, written authorization. Since we are processing the current pay period’s payroll today, this allowed me to immediately change the levy and spare Mr. Q another two weeks of extreme hardship.
Now, that would be reason enough to celebrate and marvel that the IRS had made such a goof and it actually benefited a taxpayer. But if you’ve gotten this far, read on a bit.
When I thanked Mr. White for all of his empathetic efforts, and told him that he may have literally saved a life today (Mr. Q told me he was wondering why he should go on living), Mr. White said, “Well, the Lord has me here for some reason, I guess. But I’m just doing my job.” (That from an IRS agent!?)
At that, Mr. Q’s tears began to flow again and he stepped out of my office. He had been on his knees last night in desperation, asking God to intervene. Mrs. C got teary as well. She has prayed about this situation, feeling terrible for Mr. Q. But worse, as the payroll administrator SHE had to arrange for that horrible levy every payday. She had also asked God to intervene.
Now get this: The paper she signed that became this “agreement” that the IRS accepted and then cut the levy by two-thirds, contained the $590 figure in error! In figuring up that first check (it was the first time she had ever done this) she exempted some amounts that were not supposed to have been exempted. From that first erroneous check until now, the amount we’ve had to take out of Mr. Q’s biweekly check has been hundreds higher.
You can easily attribute these events to a government snafu or a comedy of IRS errors that worked out okay for once.
I choose to believe that God answers prayer, and has intervened.
POSTED BY DUKE_OF_EARLE AT 5:10 PM