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Since I can't reply to you in the other comment: Like I said, it was an error on our part. I don't disagree that at all. I have absolutely no qualms in paying

by chime 14y ago

Since I can't reply to you in the other comment: Like I said, it was an error on our part. I don't disagree that at all. I have absolutely no qualms in paying what I owed. But I wouldn't have paid a dollar over the amount owed if they had adequate systems in place to catch my typos and immediately notified me to fix it. But a lack of proper processes on their part meant it took them 2+ years to find an error and now I owe them taxes + interest. Whether I would've made or lost money if I had invested in mutual funds, stock market, or horse races is not the question. The problem is by making a mistake, I am now at their mercy for an unspecified length of time. Also the error could not have been avoided by us. My wife was in school and we took the American Opportunity Tax Credit since it was higher than Lifetime Learning Credit. But turns out my wife's estranged stepdad had years ago, unbeknownst to my wife, taken Hope Credit for her by claiming her as a dependent. Long story short, we owed some taxes + interest after filing a correction.

ajross 14y ago
This is where I simply don't understand the thought process. You got burned and had to write a check, and you're angry. And yes, a more efficient and effective tax regime (which is what the linked article is about!) would have caught that faster and you would have been less angry. But that's where this has to stop -- your rationalizations just don't hold water. I mean, really: how is paying 4% APR on a loan[1] you got from the government "at their mercy?". It's not even a bad rate for an unsecured loan! People routinely pay much higher for car loans, and even now mortgages (which are at historic lows) are only a little better. [1] Which is what this is. You walked around with extra money in the bank for three years, albeit accidentally. Why doesn't that fact figure in your analysis? (FWIW: if the stepdad was really "estranged" and still claiming your wife as a dependent, then you should have been able to fight that. That's not how tax law works. My guess is that they weren't actually "estranged" three years ago, and she probably did meet the definition of a dependent. Again, that's your mistake if so.)
- chime 14y ago
  > I mean, really: how is paying 4% APR on a loan[1] you got from the government "at their mercy?". It's not even a bad rate for an unsecured loan! People routinely pay much higher for car loans, and even now mortgages (which are at historic lows) are only a little better. Because I didn't want the loan. What's not to understand. I wouldn't have had a problem paying the full amount if they had told me sooner. Also it was over 6% because it was 2+ years and not 3. > My guess is that they weren't actually "estranged" three years ago, and she probably did meet the definition of a dependent. I'm certain it met the definition but not the spirit. It wasn't worth having us fight or prolong this. As it is it took 8 months, four registered letters, 20+ hours on the phone, and numerous meetings with my tax attorney to get this resolved. IRS didn't just say "Cannot qualify for Hope Credit because lifetime limit was reached." They outright denied it and asked for the full amount with interest immediately. If this was a business deduction like restaurant bill, we would've paid it immediately. But denying education credit without any reason why? We had no idea her 4 years credit was already used. We had to contact her school, Sallie Mae, review all of our past records etc. and finally our accountant suggested that maybe when she was younger, someone claimed her. This 2 year $500 'unsecured loan' at a wonderful interest rate cost me easily over $3k and delayed my citizenship process by 8+ months. Did you know if IRS has an open claim against you, you cannot file for citizenship even if you're married to a citizen, lived in US for 13 years and have a green card? I'm not angry. I'm just saying their systems and processes leave much to be desired.
  - ajross 14y ago
    The facts keep changing here. How does a 12% interest accumulation on a $500 loan come out to $3000? Or maybe the $500 was the interest, in which case your "loan" amount was $4167 (which, I'll just say again, is hardly an insignificant fact -- lots of people would love to get a $4k loan at 4% with a 3-year baloon payment!). And I don't see why you ended up paying the remaining $2500k to a lawyer when even you admit the tax liability was correct (and in any case why would you pay >50% of the amount being contested on the lawyer anyway? That's just not worth it.) The one item that strikes me is the bit about the citizenship. And I can clearly see how that would be a huge disruption. But frankly I'd blame an unjust INS policy here. I don't see how you're pinning this on the IRS for correctly (if inefficiently) enforcing its tax code.

by chime 14y ago

ajross 14y ago

This is where I simply don't understand the thought process. You got burned and had to write a check, and you're angry. And yes, a more efficient and effective tax regime (which is what the linked article is about!) would have caught that faster and you would have been less angry. But that's where this has to stop -- your rationalizations just don't hold water. I mean, really: how is paying 4% APR on a loan[1] you got from the government "at their mercy?". It's not even a bad rate for an unsecured loan! People routinely pay much higher for car loans, and even now mortgages (which are at historic lows) are only a little better. [1] Which is what this is. You walked around with extra money in the bank for three years, albeit accidentally. Why doesn't that fact figure in your analysis? (FWIW: if the stepdad was really "estranged" and still claiming your wife as a dependent, then you should have been able to fight that. That's not how tax law works. My guess is that they weren't actually "estranged" three years ago, and she probably did meet the definition of a dependent. Again, that's your mistake if so.)

chime 14y ago
> I mean, really: how is paying 4% APR on a loan[1] you got from the government "at their mercy?". It's not even a bad rate for an unsecured loan! People routinely pay much higher for car loans, and even now mortgages (which are at historic lows) are only a little better. Because I didn't want the loan. What's not to understand. I wouldn't have had a problem paying the full amount if they had told me sooner. Also it was over 6% because it was 2+ years and not 3. > My guess is that they weren't actually "estranged" three years ago, and she probably did meet the definition of a dependent. I'm certain it met the definition but not the spirit. It wasn't worth having us fight or prolong this. As it is it took 8 months, four registered letters, 20+ hours on the phone, and numerous meetings with my tax attorney to get this resolved. IRS didn't just say "Cannot qualify for Hope Credit because lifetime limit was reached." They outright denied it and asked for the full amount with interest immediately. If this was a business deduction like restaurant bill, we would've paid it immediately. But denying education credit without any reason why? We had no idea her 4 years credit was already used. We had to contact her school, Sallie Mae, review all of our past records etc. and finally our accountant suggested that maybe when she was younger, someone claimed her. This 2 year $500 'unsecured loan' at a wonderful interest rate cost me easily over $3k and delayed my citizenship process by 8+ months. Did you know if IRS has an open claim against you, you cannot file for citizenship even if you're married to a citizen, lived in US for 13 years and have a green card? I'm not angry. I'm just saying their systems and processes leave much to be desired.
- ajross 14y ago
  The facts keep changing here. How does a 12% interest accumulation on a $500 loan come out to $3000? Or maybe the $500 was the interest, in which case your "loan" amount was $4167 (which, I'll just say again, is hardly an insignificant fact -- lots of people would love to get a $4k loan at 4% with a 3-year baloon payment!). And I don't see why you ended up paying the remaining $2500k to a lawyer when even you admit the tax liability was correct (and in any case why would you pay >50% of the amount being contested on the lawyer anyway? That's just not worth it.) The one item that strikes me is the bit about the citizenship. And I can clearly see how that would be a huge disruption. But frankly I'd blame an unjust INS policy here. I don't see how you're pinning this on the IRS for correctly (if inefficiently) enforcing its tax code.