Money Angles "Dear IRS . . . "

By Andrew Tobias

I finished my taxes today, which isn't much to crow about when you consider that they were my 1989 taxes. (Hope to finish 1990 next week. Big job. Been busy.)

It's not that I was late. No, I got my 1989 taxes in right on time. But then a few weeks later I got a note from the Internal Revenue Service. It was a nice note, as these things go. The IRS computer has definitely been through charm school in recent years. But "as a result of an error we have corrected on Schedule E of your return, you owe IRS . . . ((an arm and a leg))."

Well, actually it wasn't an arm and a leg. More like a finger. Still, because I had done my return with one of those computer software packages that promises no mistakes (and because my name and face were on that computer software package), I was more than a little curious to know just what the error was.

"Yo," I wrote back. "You corrected an error on my return? Getcho hands off my return!" Then I tore that up and sent, instead, a meek request that they identify my error. Call it a sixth sense I have for dealing with bureaucracy.

JUNE 25 Back came a letter from Glynda F. Hankins, chief of the IRS taxpayer assistance section, over whose signature I would guess 10 billion such letters go out each year, telling me the IRS was looking into my inquiry and would try to get back to me within 30 days. I was impressed.

AUG. 17 The promised response. Thanking me again for my inquiry, it went on to say: "Our records show we received a return from you on Apr. 15, 1990; however, it is not immediately available. Please send us a newly signed copy."

AUG. 23 Before I could whip off another 30-page return, I got, just six days later, yet another nice letter from Glynda Hankins, this one informing me that "the information you requested is enclosed." Except that it was not. Enclosed instead were a copy of the basic "who must file" instructions (someone had underlined, in purple, the paragraph about widows and widowers) and a photocopy of a death certificate for a man named Clyde Majors, who had died in 1988 of "myocardial infarction due to a ruptured esophagus." ("WARNING:" read the bottom of the death certificate the IRS had photocopied for me, "Any reproduction of this document is prohibited by law.")

"I am sympathetic to the enormous task the IRS is charged with," I wrote back, "but as you can imagine, it is hard for me to understand what Mr. Majors' esophagus might have to do with the error on Schedule E of my return." I went on to explain that, lest this turn into some sort of nightmare in which I awoke one day to find my home being loaded onto a truck, & I was enclosing the disputed amount due, plus interest -- but that I'd still appreciate knowing, at their convenience, what the alleged error was on my Schedule E. I knew that if I turned out not to owe the money, I'd eventually get it back with interest.

SEPT. 26 A letter arrived acknowledging my letter and promising a response within 30 days. Like all the others, this one closed with, "We apologize for any inconvenience we may have caused you, and thank you for your cooperation. Sincerely, Glynda F. Hankins." And I must tell you that, even though it's naturally just a form letter, that kind of touch -- to me at least -- makes a difference.

NOV. 2 "The information you requested is enclosed. Sincerely Yours, Glynda F. Hankins." No death certificate this time. Just a blank 1989 Schedule E. Nothing else.

"I already have plenty of blank tax forms," I wrote back. "But at your convenience . . . "

NOV. 28 A letter came from Glynda Hankins acknowledging my letter and promising a response within 30 days.

JAN. 29 Ta-Dah! Here was a copy of my 1989 Schedule E, which someone had marked in red to show that Lines 32 and 33 didn't add up to Line 34. Bingo! It hadn't even occurred to me to look for that kind of error, for if there's one thing a computer can do, it's add.

As it happens, my return was correct -- the numbers only appeared not to add up. (If you care: included in Line 34 were numbers from a supplemental schedule of additional partnership investments that wouldn't fit on the main form. It was a legitimate glitch. My software should have made it clearer to the IRS's software that supplemental numbers were being included in Line 34. Their software should probably have known to look. It serves me right for investing in so many stupid partnerships in the first place.)

Points to be made:

-- Don't assume the IRS is always right. The telephone advice they render is correct only about 91% of the time, according to a Money magazine test -- admittedly a dramatic improvement from prior years.

-- Don't assume your accountant is always right. My mother's taxes are done by a top tax attorney who relies on a large professional software package. But in checking the return he prepared, I found, and he confirmed, that his software had her paying $2,000 too much.

-- Don't be afraid to correct your mistakes. The form you need is a simple two-pager, Form 1040X. You specify which year's taxes you are correcting, show the correct new amounts and explain the changes. Contrary to myth, IRS agents don't sit around waiting to pounce on these things. The IRS swears that filing a 1040X does not increase your chances of being audited, and considering how busy the IRS is these days, that is probably true. If you owe more tax, the 1040X lets you make a clean breast of it. If you paid too much, you'll get a refund. There are only three parts to the 1040X, and Part III inexplicably is devoted entirely to letting you change your mind about whether you want $1 of your taxes to go to the Presidential Election Campaign Fund.

--Don't give up. The apparatus is in place, even if it's a little creaky, to try to deal with your problem in a civilized way.

-- Don't even think about inviting Glynda Hankins to lunch. She is very, very busy.