Posted by: Scott | Wednesday, May 7, 2008

The Best of Times and Worst of Times Collide; Havoc Wreaked

Please note: This post is not intended to come across as bitter or in search of a pity party. I am merely expressing thoughts that I have muling about in my head, partly out of frustration; partly out of confusion; partly out of desperation; partly out of a desire to let others know what not to do. I am not trying to excuse anything.

First, some things must be understood:

  1. I am this close to having my parents paid off!!! I want it to happen; I want the loan out of my life; I want to make it happen this month. I wanted it to happen last month, but circumstances such as interest on the loan and taxes prevented it. I adjusted the target for this month, but I goofed. I over spent. And now am at one of those points of fear that I never want to be at again, much like the one that got me into this loan two years ago.
  2. I am going to cross the finish line. I may be scraped and bruised from head to toe, but I am going to cross the finish line.
  3. I will finish this course of the race. Again, I may be scraped and bruised from head to toe, but I will finish this course of the race. Likewise, the next course, and the course to follow. Just like the Jamaican Bobsled Team, I may feel dead, but I’ve got to finish the race.

I plan to send the following to my Senators and Representative.

OK, so last month was our favorite month, which featured our favorite day, April 15th. I went through the agony of preparing my taxes via the Free File service vendored by H&R Block. When I saw the amount I was going to have to owe, I realized I couldn’t quite do it in one lump sum. I wasn’t all that crazy about the extra $52 fee that would essentially negate the student loan interest deduction, but as I calculated things out, a payment plan was the only option I had.

I filled out the appropriate paperwork and submitted the forms along with the amount of my proposed monthly payment. The way I figured it, it would only be a couple or so months and I’d have them taken care of since it only seemed logical for them to apply my economic stimulus to my taxes due, which should take close to three months off, a month’s worth sent in, and I should only have a month or so left to pay. This isn’t all that bad.

Granted, I was looking forward to stimulating the economy of paying off my loan from my parents, but, if I was keeping the IRS happy, I could divert my earned money to the primary debt of the moment.

I don’t know what happened, other than I got careless. I had paid the rent. I had eaten every day. Apparently a lot, because I was about to run out of money. This was not cool at all. I had no one to blame but myself. Fortunately, I get a pay check from one job or the other each week, so it’s just a matter of cinching up and holding on tight for a bumpy ride for a few days, and surviving.

Then I get a letter from the IRS, and I’m thinking, What did the H&R Block software miss? I don’t need this in my life right now!

I trembled with great fear as I opened it up, and was relieved to read the first paragraph:

We’ve accepted your offer to have your monthly installment payments automatically taken from your bank account. …

OK, this is alright. Then I read they want me to send in a check with “the enclosed envelope” for the $52 payment plan fee. That left me wondering why they didn’t just calculate it into the payment plan and automatically take it out of my account. Furthermore, what enclosed envelope was I supposed to use? Yup, no enclosed envelope! That was real smart on the part of the bureaucracy!

Then there was a fancy chart about special deferrals for low-income situations, and if they looked at my return, they would know I didn’t qualify, so why waste my time and space on the paper? Next paragraph talks about if I’ve already paid the $105 user fee, and I’m thinking, Wasn’t it only $52??? What’s this $105 business? No explanation was provided, nor did $105 further appear, other than to say if I qualified and had already paid, $62 would be applied to my owed taxes.

You have to understand that I’ve done all my business with the IRS on the same account for 10 years. The bank did do some reformatting a while back, but for the last 5-7 years (at the very least), it hasn’t changed. On the same note, I had authorized them to automatically debit a month’s worth of my proposal with the return. So I was a bit dumbfounded when the next paragraph stated that they needed to verify the bank account information before they could automatically debit from said account. Meanwhile, I was welcome to send in monthly payments until they start their automatic debit, perhaps next month (June).

In addition to all that, they will automatically calculate the “final payment” amount and presumably automatically debit said amount. No further reminders of this commitment will be sent to me. That to me is a little offensive as I would like to know what my final payoff amount is going to be BEFORE they attempt to ping my account for money.

Page three. Nothing has been said about my current balance. Nothing has been said about the economic stimulus refund and how my taxes owed relate to it. Terms and conditions are stated. #4 mentions that any (emphasis added) refunds will be used to pay the amount owed. Does this mean my economic stimulus is going/has gone toward my tax bill? Who knows. One word on the street is I get my check regardless of my tax obligation and then I can send it back for my taxes if I want. The other word on the street is that if I owe them, they automatically put it on my tab. I guess I’ll find out in the near future.

It goes on to talk about withholding and estimated payments to avoid this situation in the future, etc. I can call with any questions (that’s good!) or I can write, but I have to enclose a copy of the letter (five pages in all!) along with my phone number and available hours. Whatever happened to the Paperwork Reduction Acts of 1980 and 1995?? They’ll get a phone call before I send in a copy of the letter they sent me just so I can ask a question.

Reading all this leaves me wondering about that ad campaign in the 90’s about putting the Service back in the S of the IRS. The letter goes a number of different directions that make me wonder what I need to do right now, and in spite of me using the same back account with them for several years, nigh unto a decade, they can’t hit the ground running on this plan. I fail to see the improvement that they were so happy to announce.



  1. That sounds amazingly frustrating. But, like you said — you WILL get through this, and pretty soon you WILL get that loan paid off. I admire you so much for your hard work; I know how tough it is to pay down debt. I’ve made some mistakes myself.


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