Kissing up to the IRS?
To relate an interesting story...
I have been a thorn in the side of ark communist legislators (of BOTH parties) for the past couple of years. A 'republican' representative from Maumelle, Ark sent an email to the hardest communist in El Dorado, Ark in reference to a mass e-mailing I made about their, in effect, legalizing terrorist organizations in arkansas...
http://www.gohotsprings.com/focus/modules.php?op=modload&name=News&file=article&sid=316 (see (5) )
anyway - this 'republican' mistakenly hit "reply to all" so I received a copy of the email that asked "What can we do about this person?"
About 2 months later, I fould out WHAT they could do when I received a letter from the IRS stating they had changed their mind about a ruling they made (at my request) concerning disability insurance payments that I had I reimbursed the insurance company after I spent a year in the hospital. (4 years ago!)
They decided that it didn't matter about the reimbursement since I had 'possession' of the money, therefore the use of it, therefore I have to pay tax, interest and penalty.
For good measure --- all my tax credits were also declared invalid because the return was declared in error, so they added extra there also.
Nice thing to have happen to you when you are 100% disabled and trying to live off disability payments.
It will take over 20% of what's left of my IRA account to pay off these crooks.
You should be allowed a deduction in the year you repaid it under the claim of right doctrine. See your accountant.
This sounds like a vendetta carried off at the local level (just using the IRS as a handy weapon), although if true it would seem to illustrate or highlight the types of abuses that can occur under the current federal tax system.
I have become acquainted with a local IRS employee. He seems to be working for them as an auditor of sorts, although it is not clear to me (or apparently to many others as well). Anyway, he is different in that, besides being very abrasive even towards people he befriends, he never gives out any email address or USMail address. I imagine that at least part of that is for good reason, but I even know policemen who are less paranoid / private than he is. It makes one wonder, what kinds of things go on in the IRS that would make an ordinary employee go to such lengths to keep his privacy from people he comes into regular social contact with?
I also wonder if you had a chance to check into the taxpayer's bill of rights for any support there? I am not sure if it is applicable to your case in particular, but I believe its overall intent is to curb the types of abuses that your case seems to exemplify.