IRS: The Mixup

As mentioned in my previous post, the IRS recently got in touch with me about some “substantial unreported income” from my 2005 Federal Return. This made me extremely nervous.

I called the IRS immediately to try to fix the situation. I was like Chunk from “The Goonies” with my hand halfway in the blender, ready to spill my guts and tell everything bad that I’d ever done.

The guy at the IRS told me that there was a substantial 10-99 that I didn’t report. I usually get 10 to 15 separate 10-99’s every year, but none of them would be considered “substantial” in my opinion. He told me that the IRS would send me all the income information they had and that I was to use this information and resubmit my 2005 taxes and get it back in their hands in 30 days. Period.

The papers arrived a week later. There were five pages of W-2’s and 10-99’s. I checked them carefullly. I found the problem on the last two items. It looked something like this.

_________________________
CompanyX:
NON-EMP COMP. . . $310
TAXES WITHHELD. . . $0
_________________________ 
CompanyX:
NON-EMP COMP. . . $31,000
TAXES WITHHELD . . . $0
_________________________

It appears that CompanyX mistakenly sent the IRS two items, the second of which has a couple of extra zeros. Now the IRS wants me to pay taxes on $31K of income that I did not receive. Great, just great.

 I called the IRS and notified them of the mistake. The IRS told me to call CompanyX and have them resend the correct documents. When I called CompanyX, they told me that it was a computer glitch that affected around 20 of their contractors and they have someone on their payroll whose specific job it is to work this out with the IRS on my behalf.

I still had to redo my 2005 return, ignoring the arbitrary item. Turns out I owe the IRS a total of $438. I owe the money; I will pay it. I’m fine with that. What I’m not fine with, however, is CompanyX making an insane mistake that has now led the IRS to go through my finances with a fine tooth comb when they never would have had any reason to pay attention to me in the first place. I’m pretty sure the IRS isn’t done with me and this has put a serious strain on my relationship with CompanyX, with whom I have subsequently done several thousand dollars of business.

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2 Responses

  1. Glad to hear it sorta worked out!

  2. @Todd: Me too, sorta. Thanks!

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