Holy cow, I wrote a book!
I arrived home yesterday to find a letter from
in my mailbox.
Dare I open it?
The only other interaction with the IRS I'd had previously
was several years ago where they told me I had overpaid my taxes
and sent me a refund check of a few hundred dollars.
I went back and reviewed my return and concluded that my original
return was correct and they were wrong to send me the refund check.
I called the friendly IRS office and explained how I came to the
numbers I did.
The agent went through the same computations and agreed with me,
and instructed me how to return the check with an explanatory letter.
It's not worth committing
tax fraud over just a few hundred dollars.
With some trepidation, I opened the letter.
This time, the IRS believed that in 2003,
I failed to report income in the amount of
over ten times my actual salary. What happened?
There were a few errors that they picked up, on the order of a few
thousand dollars, although enough of them were errors in my favor
that I think I came out ahead on that part.
(For example, I forgot to report my sales of
Like many other peop^H^H^H^Hsuckers, I took a bath on both,
and those losses easily covered gains elsewhere.)
But a few thousand dollars is nowhere near the tenfold alleged
underreporting. Where did that come from?
I sold a lot of stock that year
as part of a larger "realignment" of my personal finances,
and due to the weirdness of United States tax law,
the way I sold some of the shares
required the income to be reported in a special way.
And that's how I reported it.
The IRS happily accepted that income but simultaneously claimed
that I failed to report it!
Not only do they want to
double-count the income/loss from those stock sales,
but since they don't have cost basis information, they
assumed that the sales were pure profit.
Now I get to spend the weekend taking a few deep breaths,
doing a lot of photocopying of supporting documents,
and writing a friendly letter back to the IRS,
explaining why I believe they
over-over-overcounted my income.
I hope they accept it.