Friday, May 23, 2008

Should Government be Held to as High a Standard as it Holds its Citizens?

Do you ever cringe when you check the mail and see you got a letter from the IRS? I did yesterday when I got a notice in the mail that I owed the government another 1000 dollars for a small mistake made on my 2006 taxes. Why? A qualified dividend and ordinary income of around 430 bucks that did not get reported until later in the year and I was never sent a notice. For some reason, the IRS notice stated that I owed 984 dollars (717 in taxes) which included penalties on the money. "How in the world," I wondered, "could I owe more money on the income than I made?" So I called the IRS today to find out.

Naturally, it took me several tries and a lot of patience to get through but I finally did. A rather nice woman assisted me but seemed to have little compassion for my predicament initially. "Well, you get a penalty for not accurately reporting this money." "I didn't know about this money because my fund company did not issue me any information," I added. Then I heard a laugh. "Whoever issued this notice for your penalty and tax made a bunch of mistakes. This is embarrassing for the IRS. You actually owe nothing and should never have gotten a notice."

"So can I issue a penalty to the IRS for making a mistake?" I asked. No response, but I was so relieved that I did not owe any more money that I just wrote down her name and the information to file away and considered myself lucky. But in the back of my mind, I couldn't help but think, "Why is it that if a citizen makes a mistake, we are considered suspect and penalized but if the government does it, it's always okay? I will leave you to ponder that question.

28 Comments:

Anonymous Anonymous said...

Hmmm... Well, the government is US. We pay for it and we elected the people who run it. So any penalty payment you recieved would come from other taxpayers. It's not really fair to penalize them because they didn't make the mistake.

Now you could penalize the individual preparer who made the mistake, but I don't think you want to go that far, do you?

4:23 PM, May 23, 2008  
Blogger Soccer Dad said...

Well let's see, when you pay your taxes through withholding the government gets your money right away. If you withhold more than necessary you file your return and sometime later the government sends you back the amount overpaid sans interest.

But let's say you didn't withhold enough and you file and you don't send a check to make up the difference. You start paying interest from Apr 15. There's quite a bit of imbalance.

Didn't your husband just write about police officers in Montgomery County MD - where they now have speed cameras - who won't pay their speeding tickets?

4:37 PM, May 23, 2008  
Blogger Larry Sheldon said...

There is a reason why some of us think the power of government needs to be severely cut back to controllable dimensions.

This incident shows several of them.

The government should, for example, never have the power to extract a penalty with out a judicial proceeding.

And (implicit), judicial proceedings should always be "loser pays".

5:46 PM, May 23, 2008  
Anonymous Anonymous said...

I still think the IRS has way too much power.

It kind of puts a damper on my admiration for Washington, if you will.

6:03 PM, May 23, 2008  
Blogger Trust said...

This is the exact reason the Constitution banned a direct tax (i.e. income tax). That is, until they sold us on amending it.

6:17 PM, May 23, 2008  
Blogger Misanthrope said...

Another example of why I support the FairTax.

And actually, government should be held to a higher standard.

6:52 PM, May 23, 2008  
Blogger J. Bowen said...

I was talking with the girl who I tutor two days per week about how the government did/does operate. Her response to a question that asked of her (I can't remember what the question was about) was, "Well, they're the government. They can do whatever they want."

Many years of apathy and neglect on the part of citizens have given us the government that we now have.

8:22 PM, May 23, 2008  
Blogger Francis W. Porretto said...

The phrase you're looking for, my dear Dr. Helen, is sovereign immunity. The original phrasing was "The King can do no wrong."

Our government has completely abandoned the idea of the rule of law, wherein any man who injures another is held liable for his deed no matter who he is or who he works for. That's simply too much accountability for people whose lives center on bossing the rest of us around.

And there are people who wonder why I talk revolution.

9:04 PM, May 23, 2008  
Blogger pdwalker said...

"Civil servants" really means "civil masters". That is why they can never be held responsible.

9:16 PM, May 23, 2008  
Blogger Unknown said...

trust --

Are you referring to section 2, 8 or 9 or some other part?

11:28 PM, May 23, 2008  
Blogger cinderkeys said...

Testify, Dr. Helen. I know someone with a serious mold allergy. One day, the insurance he'd signed up with through Medicare to get his prescriptions filled decided he'd never signed up with them. Never mind that he'd already gotten prescriptions filled through them, or that they'd been sending him statements. Nope, never heard of him.

A year or so later, they decided that, oops, he had been enrolled. So they put him back in their system. And told him he had to make back payments for the coverage he hadn't been receiving in that time.

He has a serious lung infection now because they denied him the meds for so long. He's finally talked to one person who said this would be taken care of, and he wouldn't owe any money. No mention of them paying some kind of compensation for their screw-up.

2:19 AM, May 24, 2008  
Blogger Trust said...

@oligonicella

It was 1.9.4, superceded by the 16th amendment. I should have been clearer. It wasn't a ban, it was a restriction. Today's tax would likely not be legal without the 16th amendment, as previous attempts at an income tax were ruled as unconstitutional by the supreme court.

10:48 AM, May 24, 2008  
Blogger tomcal said...

Did you enjoy listening to the “Waltz of the Blue Danube” while you were on hold? I always do; it makes me feel peaceful and calm by the time I get to talk to the agent – all of whom have the same name by the way…

10:55 AM, May 24, 2008  
Blogger Helen said...

Tomcal,

I don't remember any music, but then I wasn't paying much attention. I usually read a book or work on something while I wait.

11:14 AM, May 24, 2008  
Blogger Unknown said...

trust --

That is the point of amendments. To change things as the country grows and changes. And, one can hardly argue against amendments without arguing against the Bill of Rights.

11:46 AM, May 24, 2008  
Blogger Trust said...

@oligonicella

I'm not against the ability to amend the constition. I understand that is the point of amendmentsw and it is necessary.

Being against a certain amendment doesn't mean the amendment isn't legal. The 16th ammendment is the law of the land, and I accept it even though I would vote against it if I had the opportunity.

Best,
Trust

1:34 PM, May 24, 2008  
Blogger J. Bowen said...

That is the point of amendments. To change things as the country grows and changes. And, one can hardly argue against amendments without arguing against the Bill of Rights.

Amendments, both proposed and passed, must be looked at in terms of what may happen and what has happened. One can hardly give unqualified support to any amendment when that amendment violates certain principles.

Question: would you still be in favor of amendments being passed by the rulers if they had passed the Corwin Amendment or the Equal Rights Amendment?

Being against a certain amendment doesn't mean the amendment isn't legal.

Legal by what standard? That is the question that must be asked.

Are the laws that are passed legal according to natural or civil law. If they are legal according to natural law then it would be almost impossible to argue against them (since natural law does not change) and we would be living in a much better world (the US, for example, would never have had slavery, would never have committed genocide, would never have denied non-property owners, blacks, and women the right to vote, would not have the income tax, and so on). All proposed laws would have to pass a set of standards before becoming laws. Any proposals that could not meet those standards would not become law.

If, however, they are legal by civil law, then any and every law that is passed should be followed regardless of its intentions or effects (the list of injustices in the US is much shorter since the Revolutionary War, like all revolutions, was illegal, thus preventing any of those horrible injustices from being US-sponsored injustices). The standards that proposed civil laws must meet are much lower. They simply must have enough support by the law-makers. There is no requirement that proposed laws be intended to provide for public safety, well-being, or any other "public good". There is no requirement that proposed laws cannot violate one group's rights. Proposed laws merely have to have enough support from law-makers in order to become law. Once that happens, you, according to your logic, should follow them, regardless of the effects on others or yourself.

3:17 PM, May 24, 2008  
Blogger Trust said...

@j.bowen: "Once that happens, you, according to your logic, should follow them, regardless of the effects on others or yourself."

It frankly depends on the law. I'm against the income tax, but I pay it because it is the law.

On the other hand, if I were a German during the Holocaust, I would break the law to hide Jews.

Really, it depends on the law. Please don't take a simple statement and twist it into more. There is a difference between disagreement with tax law and supporting a grossly immoral, even evil, law.

6:39 PM, May 24, 2008  
Blogger Eric said...

Something very similar happened to me, except that it involved my failure to properly report a minor LOSS on a sale of stock which was not on the 1099 I filed, but on a "supplemental 1099" I never saw. The stock was sold at a loss, but the sale was automatically reported by the stockbroker computers to the IRS computers. The latter then automatically taxed me and assessed penalties on the ENTIRE AMOUNT of the sale, even though I lost money.

It took days of negotiating, and hours on the phone to make them acknowledge a mistake -- which they maintained was entirely mine.

On another occasion, I was automatically imputed as having $80,000 in income I never earned, simply because I moved from one state to another, but the taxing authorities assumed I was still there and making money I wasn't. Because I moved, I never saw the notices of assessments, which automatically turned to liens, and I had to spent time and money having them removed. I was told that imputation of income is "routine" when it is not reported. Now, how are you supposed to report income when you aren't there and didn't earn it?

What added insult to injury was that none of these things were done by human beings.

If we have to live under such tyranny, I'd prefer it if it could at least be made more personal.

9:46 AM, May 25, 2008  
Blogger George Weiss said...

i would suggest you get something in writing that it was a mistake and you don't owe.

that MIGHT make a difference if they change their mind again and say you do owe. maybe-(usually your liable on interest and penalties even if they tell you the wrong thing in writing but I'm not sure)

but definitely "i was told by some random woman on the phone not to wrry about it" wont fly.

2:48 AM, May 26, 2008  
Blogger Helen said...

George Weiss,

I got the woman's name and IRS number to follow up and was told I would receive a notice that stated that I owed nothing within 5-7 days. I will follow up if I don't receive it. Thanks for the advice.

8:25 AM, May 26, 2008  
Blogger knox said...

Why is it that if a citizen makes a mistake, we are considered suspect and penalized but if the government does it, it's always okay?

I don't know anything about the law. With that said, I can't help but think that the tax code, as it operates today, is somehow fundamentally unconstitutional.

How can a citizen be expected to obey laws that are complex--and sometimes incomprehensible? I am always terrified that we are going to unwittingly make an error on our return and be penalized heavily for it. That can't be right. And the government makes no distinction between innocent error and willful fraud when it comes to passing out fines & penalties.

We desperately need the Fair Tax or a flat tax at this point. Too bad even the conservative politicians are worthless on these issues.

2:14 PM, May 26, 2008  
Blogger Peregrine John said...

Count me in as another Fair Tax supporter. The only thing the IRS has ever been good for is a way to nab Capone.

10:20 AM, May 27, 2008  
Blogger Nick said...

"Why is it that if a citizen makes a mistake, we are considered suspect and penalized but if the government does it, it's always okay?"

Because they're the ones with the guns who are trying desperately to take ours away.

BTW - It would be nice if you enabled OpenID sign in for comments. Some of us are actually trying to avoid using our Blogger accounts for commenting.

11:06 AM, May 27, 2008  
Anonymous Anonymous said...

If taxation was flat and fair, what would all the CPA's do? The corporate lawyers? The government lawyers and other embedded government employees involved with the IRS? It ain't gonna happen, as with anything else, unless we make it happen. We the people, aren't making anything happen. We are watching it happen, and / or wondering what happened. The difference between democrat and republican continues to narrow. When do we blame ourselves?

On another note,I think Obama has veteran's day and memorial day mixed up. Or is perhaps just clueless about either. In a speech on memorial day he spoke of our "fallen heroes", "many of whom we see here today". No, I take that back. He's an idiot.

12:53 PM, May 27, 2008  
Anonymous Anonymous said...

Come to think of it, perhaps John Kay was right in some of his assessments. John Kay being the lead singer of Steppenwolf, and I am talking about their album, Monster.

Sorry, I grew up playing music and listening to a lot of music. A lot of my analogies stem from that.

Anyway, the main thrust of the particular album is that the U.S. government has become a monster, and will not obey. The album came out in 1970. It is more true today.

What freedoms, truly, do we have? With the average of 25,000 new laws made almost every year, collectively, taking all city, county, state and federal jurisdictions into consideration, not as many as last year, or the year before. As has been discussed on this blog before, everyone breaks numerous laws every day. Without even knowing it.

9:38 PM, May 27, 2008  
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