Not Worth Dying Over

There is a corner in my office where the paint is gone and the plaster is cracked and falling out. It is the corner I pound my head in when events are too much to take. A year ago I had such an event.

It all started with a new client that was referred to me. I had her sit down with Jeff and go over her tax problems. She had accumulated several years of unpaid tax bills and was very jumpy as the IRS was getting serious about collecting.

She became more animated by the minute. I was asked to step in and see if I could lend some guidance. She talked a mile a minute and never stopped for air. I told her we will need to review her documents to come up with a game plan. She set another appointment for a week later. Jeff and I were drained from the high voltage encounter.

Within an hour, her friend is on the phone complaining we did not do enough to help the new client. I told the friend we needed to review the documents so we can create a plan of action. The friend came within an inch of telling me I’m incompetent.

At this point I normally tell the client I will no longer serve them, but, because she was a referral, I decided I would give it “best effort.”

The next week we meet and I presented a plan that was livable. I got the IRS on the phone to hammer out the details. All the while she rambled on. It was very hectic and stressful.

I explained to the IRS what we had and our offer. The IRS accepted and wanted her verbal acceptance as well; so I put her on the phone. Reluctantly, I might add.

She continued her verbal assault with the IRS. The IRS agent tried to get her to settle down. She then tells the IRS agent she will kill herself if she couldn’t get this done her way. And then it got exciting.

You know how it goes, you threaten suicide and the IRS and tax guys have to take certain step, as required by law. We managed to get New Client settled down without her being hauled away. The IRS calls back a while later to verify the situation is under control. If not, the IRS would bring in the police, etcetera, etcetera.

Long story short, we got the agreement with the IRS done. I told her I could no longer serve her. She left in a huff.

A half hour later, her friend is back on the phone explaining my lineage to me. She was very unhappy with my service. I could not hold back any longer, and said, “Then she should be happy to never return here.” She hung up on me.

Folks, please. Taxes are bad, I know it. But it is not worth killing yourself over. I only bring this up because I had two clients come in over the last eighteen months with large tax issues and never let me do my job and then told the IRS they needed a rope. Stop. Before you say a word, stop. Okay? I can solve a lot of tax issues, but not if you work against me. Remember, your way does not work. You tried it and it lead to the mess you are in. I don’t win them all, but I do win a good majority.

It has been a year since I had all that excitement. The plaster in the corner has been repaired. I am gun-shy, though. Will the next client deal the suicide card? God, I hope not.

Have mercy on your friendly accountant. Smile. We want to help. Really, we do. Answer our questions as best you can. Let us build an action plan for you, one you can live with.

It is not worth dying over.

And now you know why I have no hair on my forehead.

I Don't Pay Tax on That

A dirty bug-a-boo showed up again today. I thought it was dead, buried for all time, but somebody at the tavern must be spouting tax law after their seventh Bud.

Client calls this morning and wants to verify he didn't need to pay tax if the amount is under $600. After pounding my head into the corner five or six times, I return to the phone and explain that all earned income is reportable. If you do a small side job for $350, you still need to report it.

He didn't believe me. Actually, he thought I was stupid and nearly said so.

How do I convince said client on actual tax law? The light bulb flashes on. I rephrase my advice. "Okay, you got me. You don't have to pay tax on income under $600. That is why I charge so little for my services; haven't paid taxes since Reagan was in the White House."

It took a while for the light to go on over his head.

The $600 rule is for filing Form 1099. If you receive $600 or more from a vendor during the year, they will inform the IRS on Form 1099. Just because you don't get a 1099, doesn't mean it is tax free. And if you get caught, the penalties and interest are usury.

Tax Office Humor

I talked with another professional in the tax industry today and he shared two stories that cracked me up.

Story 1.) Said tax professional hired a young accountant straight out of college. The newbie decided after three years on the job that improving her skills through continuing education classes is really brainwashing and that she will not participate in this sort of behavior. Of course, it was her last day working there.

Story 2.) Tax offices are always hungry for experienced tax preparers February to April. First day on the job, newbie is given a practice return to get familiar with the tax program. Every time the boss walks by the office, newbie is moving papers furiously on his desk. After three hours, the boss asks newbie what is taking so long. His response, "Where in the 'on' button on this thing?" He couldn't turn on the computer. For some reason, newbie never made four hours on the payroll.

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Soon you too could have your own funny tax office stories to tell.

Hope this brightened your day. I sure laughed when told these stories.

Tax Increases

I'm as scared as hell, and you should be, too. I reviewed the package of tax increases passed and proposed today and know a lot of clients will suffer.

Many people will suffer income tax rates above 50% federal and state combined. And the government needs more money to stay solvent. Your money.

Even though the marginal tax rates may not reach 50%, when combined with phase-outs, the tax burden will increase by more than half for a large number of people. The higher your income, the deeper the bite.

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All the money the government pumped into the economy over the last several years will turn to inflation unless removed. There are only two ways to remove the money: higher taxes or higher interest rates.

At one time I felt inflation would accelerate. I still do, but with less conviction. The tax increases will mute the push-pressure on prices.

To put tax increases in perspective, consider this: If your taxes are 30% and rise to 35%, your tax burden has not increased 5%, but over 16%. The 5% increase is against your total income. Five divided by thirty is 16.6%, the real increase in taxes coming out of your pocket. This is money that could be used to buy goods and services, creating jobs. Now, it will go to the government for public spending and debt servicing.

My gut feeling is that the economy has seen the worst this round. Even if the economy improves, it will not translate to a higher standard of living. And if you have debt it will be worse yet. You pay debt off with after tax dollars.

It is in your best interest to reduce debt and prepare for a major transition in our economy, and I'm not just talking about alternative energy.

On a brighter note: Weather has sure been nice.

Don't throw anything at the nice accountant. Congress made the rules, we are just the messengers.

IRS, tax humor

The IRS is more than frustrating. Today, Jeff and I had a phone conference with Revenue. The call had two of their attorneys, our client's attorney, Jeff, and me.

We spent a half hour debating what would be the best time to schedule another phone conference. Zero issues were covered or even mentioned. Let me be clear: The IRS needed a conference call, attorneys and all, to set another phone conference. Got it.

I know how to balance the federal budget. Just stop all the stupidity. We could all get a nice tax cut and balance the budget if this kind of waste was ended.

Don't count on it. It has been this way as long as I've been in the field and I started in the mid-80's.

Considering IRS foolishness, I had a productive day (outside the conference call). I can see a sliver on glass poking through my desk top.

Go figure.

What Not to Say In a Tax Office

I will start series on a variety of topics of interest to taxpayers. Today is the start of a humorous thread.

First, as an update. I have all phone calls I can answer returned as of tonight. WDOR Voice Access issues are moving to the front burner as reconciles and other write up work is getting done. Jeff will be at the Appleton IRS office tomorrow morning and I'll man the shop solo. I plan on finishing payroll for an LLC and pay vendors for an FLP. Then I will hunt up the missing docs to finish up the Wisconsin issues.

Now, off to some tax humor.

Recently, a new client wanted us to solve all her tax woes with the snap of the fingers. In other words, she wanted to pay me $100 and force the IRS to drop the $65,000 she owes. If it were that easy I'd have a new car.

Jeff worked hard with said client to develop a realistic game plan for handling her tax situation. With the client present, Jeff calls the IRS to hammer out the details. This is where the client tells the IRS she will kill herself because of all the taxes owed.

Yes, you can see it now, can't you? Police and ambulance race to my office at the IRS request to save the taxpayer's life (to keep her alive to pay all those back taxes, lovely, aren't they?). We realized the IRS response and called the IRS and police to let them know we had things under control and that the client was just upset.

The moral: Don't threaten to harm or kill yourself or anyone else in my tax office. I am required to report this kind of activity. And if required, I'll order Jeff to do mouth-to-mouth. Ownership hath its privileges.

Later that day she calls my office back to complain she didn't get her moneys worth. Have you ever noticed the crumbling plaster in the far corner of my office? Now you know why.