Saturday, January 12, 2008

Interest from the IRS

We received a 1099 form directly from the IRS (whose Federal Identification Number is 38-1798424, not the more plausible 00-0000001 (or is that reserved for the President, like Air Force 1?)) for $11.00 of interest in 2007. It was a bit confusing, because the IRS didn’t pay us $11.00 of interest in 2007. Turns out this is for the interest component of the telephone excise tax refund that was part of last year’s income taxes. It’s amazing how much effort and money we expend in this efficient capitalist system to measure every last dime. Perhaps at some point it’s not worth the printing and postage to keep sending this money back and forth to the government? After I give them $3 out of this $11 that they gave me because of the $80 that the phone companies gave them because of the $1900 that I gave the phone companies, can we call it a day?

11 comments:

Michael said...

I almost forgot -- I also get to give 60 cents of that $11 of interest to Massachusetts. This seems like a very roundabout way to increase state aid.

Michael said...

I hope the the federal tax id number for the IRS isn’t supposed to be a secret. I’d hate to find out next week that someone had opened up a new Home Depot credit card in the IRS’s name and maxed out the country’s credit line.

Anonymous said...

Max Asked! I received a 1099 from the irs for 271.75 supposedly on an overpayment of federal tax. As I haven't received a check for this amount, Why am I to report this on my 2007 taxes. If it is an overpayment as they state, it seems to me that I should have received a payment in this amount!!

Michael said...

Well, first I need to mention that I am not a CPA or any other sort of expert, I am not giving tax advice, and past results are no guarantee of future performance.

I’d recommend looking carefully through a copy of the 2006 tax return that you filed. You kept a copy, right? Perhaps somewhere on there you’ll find a matching amount. If that doesn’t work, and your bank statements don’t show a direct deposit for that amount, try calling the IRS and asking them for an explanation. I’ve received 1099s for overpayments of state income taxes, but never for overpayments of federal income taxes.

Brett Stauner said...

This sort of thing from the IRS and our Federal government is absurd (we gave you a break and now we're going to tax you on that too). If you'd like to learn more about a bill (HR 25) in congress that is working to overhaul our tax system and abolish the IRS you should check out the FairTax. Maybe you've heard about it already, maybe not, there are a lot of free resources here (http://www.fairtax.org) and the book, The Fair Tax Book by Neal Boortz and John Linder (http://www.amazon.com/Fair-Tax-Book-Saying-Goodbye/dp/0060875496) is a real eye opener.

If you've not looked into it at all, just give it a few minutes, and see the awesome potential the FairTax will offer us. If you maybe need a little more incentive to check it, while reading the book I realized that the Constitution had to be amended (Amendment 16) to make it so that the government could legally tax our income, your withholding, that money taken out of your paycheck before you even see it, was once unconstitutional. A part of The FairTax is to get that amendment repealed! Please check it out and if you agree with it make sure to contact your Congressional Representatives to let them know you want The FairTax passed.

Michael said...

I think Brett’s comment is a great example of healthy political advocacy, separate from whether or not you like the Fair Tax proposal (I don’t, personally). If you want to advocate a political position, explain it a bit and tell your listener how they can learn more if they’re interested. Encourage your listener to make up their own mind, and suggest a concrete action they can take if they agree with you. Advocating political positions is an essential part of democracy.

ChezNiki said...

Its like a penalty for catching them at their mistake. Bush at his finest. Thank God the elections are coming soon.

Michael said...

A more detailed explanation of the interest on the telephone excise tax refund being taxable (and perhaps the entire refund if you claimed the excise tax as a business deduction originally) is now available at Inside Indiana Business. The IRS may not send out 1099s if the interest component was less than $10, which would be the case for (many? most? all?) people who took the standard allowances on the refund rather than calculating an amount. I suspect most people forget to include $5 of interest on their tax return if they never received a 1099, and don’t normally get in trouble for it because the IRS doesn’t usually know about the interest if you don’t receive a 1099. But in this case, the IRS knows about the interest even if they don’t bother to send a 1099. Will the IRS be confusing even more people (and wasting even more postage) by sending out opaque letters to those folks saying they owe another dollar?

Frannydag said...

I received the same 1099 form that 'anonymous' is asking about, a photocopy with the fed ID number you guys are talking about, the IRS. Mine was for $28.00 I am wondering if this is the interest on the phone tax mess, as I have no ,income that is interest bearing, just my disability check. If it is, there is no explanation at all of what it is about, and the less-than-friendly IRS agent said it must have been some income I forgot... If indeed this is from the phone tax, they should at least know that and not try and make it sound like you're trying to pull something over on them for a lousy $28!

Frannydag said...

I also received a photocopied 1099 from the IRS tax id, for $28. In the paragraph under the box says it is either an overpayment or interest paid, but listening to others seems like it is the phone tax - think they would make that clear somehow. I must also add I called the IRS and spoke to a really unhelpful man who had no idea of this, who insisted My whopping $28 was money I say I didn't know what it was when I really had to know - like I would pull somethng over on the IRS for $28 bucks! Time they stopped playing almighty and realize if someone is calling with a question, they really are trying to do things right.

Michael said...

To avoid having this become a litany of complaints against the IRS or further random rants about taxes, I’m closing comments on this post. I’m leaving the thread up in the hopes that it will help clear up a mystery for some folks.