Taxman

So the IRS finally caught me by the sensitive spot. I owe them a bucket of money, but I haven't been paying. The reason why is simple; in their letters of warning, they threaten a maximum fine of 25% over the past due balance; Visa charges me 20% a month, and I owed them five times what I owed the IRS. It was pretty simple math. One of my credit cards has a $3,600 balance for which I've been paying $100 a month for the last three years. It was $3,600 three years ago, and it's $3,600 today. I've paid $3,600 already, and if I gave them the full balance tomorrow, I'd still be paying $7,200 for a $3,600 bill. And I won't be paying them tomorrow. Truth be told, I wasn't ignoring the IRS. I triaged my debts, found out who was hitting me hardest, and made the decision to pay them off first.

On Friday, I got a phone call from the temp company telling me THEY got a letter from the IRS for a lien on my paycheck. Fine, I figured, they'll take an additional percentage and get them off my back once and for all. Actually, it's much worse than that. For a lien, they look at a chart which shows my total exemptions on one axis and the frequency of my paycheck on another. Where the two meet determines how much money they leave me with. In my case, I'll get $239.42 from each check, and they get the rest until the lien is gone. Considering what I currently owe, if I work 60 hours a week, they'll be paid off in two and a half months. In the meantime, I have to learn to live off $239.42 a week.

Okay, fine, so they got my attention.

I called to get the lien removed and work out a payment plan, and the first man I spoke with informed me I never filed last year's return. I had tried to e-file, went through all the steps, but apparently never hit the "submit" button. They won't remove the lien until that's done. He tried to tell me I should hurry, because if I file by October 15^th, I still get that $600 economic stimulus check! "Stimulus" my ass. I owe them almost ten times that amount, not to mention my credit card debt; the only thing $600 will stimulate is a $600 payment right back to them, less the cost of a stamp.

So I got off the phone, found my e-file status, submitted it, and got my next piece of bad news. I owe an additional $2,000 for last year. Fine, whatever, that's a drop in the bucket. I called them back. I spoke this time with a woman who told me to fax the 1040 form so we could get started the process of removing the lien, which I did. She told me the IRS needs 5 to 7 business days to process the form, but in the meantime we could get started with what the payment plan might detail. She asked me a few questions.

"Are you able to pay the balance in full right now?" Are you kidding me? Logically, if I could pay the balance in full right now, would we be having this conversation about a payment plan?

"Do you have a rich friend or relative you could ask to pay this bill for you?" I won't even begin to describe the stomach-churning sensation I felt as I breathed the word no.

"If we gave you a sixty day extension, could you pay the bill by that time?" This was asked by a woman who had, not five minutes earlier, told me how much money I made last year. I'm sure she was reading down a list of questions she's required to ask, but she still asked me if I could come up with 25% of my annual salary in 16% of a year.

"Can you get a loan, or put the balance owed onto a credit card?" I explained why I was paying off the credit card debts first, that they interest they charge is much more than the penalty the IRS charges. She told me that's true until you get put on a payment plan—credit cards charge you interest once a month, but the IRS charges interest compounded daily. Well, one of the cards I consolidated almost four years ago is almost paid off, which leaves enough room for this balance. Frustrating thing to have a card go from paid off to maxed out, but what else can I do? I told her I'd call the credit card company and see if this would be possible.

Before I could go, she hit me again—she told me this is the 4^th year in a row that I've owed taxes; this means they're not taking enough out of my paychecks, so clearly, they need to take out more. I explained that my previous job only paid about $2 hourly, and the rest of my income was from tips. The $2 hourly wasn't enough to cover what I owed in taxes, so I ended up owing more at the end of the year. I told them that I now no longer have that job, that I'm getting paid a much higher wage from which there's money left over after taxes are taken out, so surely I'm paying enough this year. Do you really need to take out MORE taxes?

"Yes," she told me. Yes they do. It was time to hang up and call the credit card company.

When I put the credit account into the debt management program, they blocked the account from further purchases against it. If I removed it from the program, maybe I could then charge my IRS debt, so I called them to find out if it was possible. The woman I spoke to told me this credit account was closed—get this—August 19^th, 2008. I asked if I could get it re-opened, and was told I have to wait until "business hours", which just happen to be MY business hours. So now I have to wait until Tuesday (Monday being a federal holiday) to find out if paying by credit card is even possible. If it isn't, my options are running out fast.

Finally, the latest blow in the saga hit my email account this afternoon. "Your e-filed return has been REJECTED by the IRS.". It seems I filled out a form incorrectly, so now I have to go back and try again. When I signed on there were two errors reported.

"The Primary Prior Year Adjusted Gross Income (or the Primary Prior Year PIN) used to e-sign the return must match the corresponding data in IRS records." When I spoke to the first man about this he TOLD me my primary prior year adjusted gross income, which is what I typed in—but maybe I typed it wrong. I can go back and fix that, but there was another error waiting for me.

"Form 1040 - When Filing Status equals 4 at least one of the following fields must be significant Qualifying Name for H of Household and SSN for Qual Name Number of Children Who Lived with You Number of Other Dependents Listed. When Qualifying Name for H of Household is significant SSN for Qual Name must be significant and within the valid ranges of SSNITINATINs and cannot equal Primary SSN or Secondary SSN." Um . . . . what? The syntax of the message alone is why lawyers—even federal lawyers—get paid so much money. Not only can they understand this type of message, they're capable of composing this type of message.

I recently came across and old journal from 2001. I had just graduated college, and was swearing I could pay off my $6,500 debt in less than one year. Far from paying it off, my debt has only increased. I wish I could be focusing on a career and family. I wish that I could include aspirations of what I want to become as a part of who I am today. Instead, who I am today is defined by making up for the mistakes of my past. It is defined by how much longer it will take to clear the path for the future I should have stared seven years ago. It is defined more frequently and more significantly by my failures than my successes.

Is that true for everyone?