Can Illinois really be this hard up?

[Ringers]

A client of mine got a 4 page letter from the Illinois Department of Revenue yesterday that they were reducing his Illinois overpayment from $1888 to $1886.60 due to errors in the return.  Looking at their explanation, it showed that they charged the client $1.40 for the late payment (by 5 days) of his 2nd quarter estimated tax payment.  Really!  Since his overpayment was applied to his 2022 estimated taxes, we now have to reduce the amount applied from $1888 to $1887 (rounded off).  Was all of the postage and form corrections worth the $1?

 

I know my state is in debt, but things such as the above are part of the cause rather than part of the solution.

(smh)

 

I have been preparing taxes since 1972, and this takes the prize for the smallest adjustment letter ever received!

 

 

[Sara EA]

I finished a return today that was on extension.  Turns out the client owes IRS $6.  With IRS interest rates so low, she might have 20-30 cents interest.  I was going to tell her she likely won't hear from IRS, but now I'm not so sure.  I think it's PA that doesn't bother if you owe less than $3.  IRS usually works in whole numbers, so we'll see.

[Abby Normal]

Write to an Illinois rep and explain to them that the state probably spent $5-10 just to collect $1.40, and suggest they instate a minimum of $15-20 for any penalties or interest.

[mcbreck]

Back during the economic meltdown of 2008 I received bills from the states of Washington, Oregon and Colorado wanting me to pay for their state license to have an office within their state. We aren't within 1,000 miles of any of those and have one total client who lives part of the year in Oregon.

 

Thankfully Illinois has transitioned out of requiring a business license within their state and an agent to represent you if you do any business within the state.

 

When will the Supreme Court get the case for cities charging earnings taxes for workers who worked remotely during the pandemic? I have a client who is a consultant and his employer is within the city but he's been working for Fortune 500 company outside the city limits for 6 years. Pre-pandemic the city said he wasn't a city worker but during Covid they reversed and said that was no longer allowed. He doesn't live in the city, hasn't been in the city in years for work but the city claims he's a city worker and subject to the tax.

[Lion EA]

2 hours ago, Abby Normal said:

Write to an Illinois rep and explain to them that the state probably spent $5-10 just to collect $1.40, and suggest they instate a minimum of $15-20 for any penalties or interest.

With a minimum penalty of $15-20, that client that owes $1.40 will get a bill for $21.40. Good for the state, but bad for our clients and for us.

CT has a late filing fee of $50. My client who had a refund of $5 refused to file CT. (I was at HRB back then.) He received a bill for $45 = $50 penalty - $5 refund. CT makes it worth their while to send out letters!

[Abby Normal]

2 hours ago, Lion EA said:

With a minimum penalty of $15-20, that client that owes $1.40 will get a bill for $21.40. Good for the state, but bad for our clients and for us.

CT has a late filing fee of $50. My client who had a refund of $5 refused to file CT. (I was at HRB back then.) He received a bill for $45 = $50 penalty - $5 refund. CT makes it worth their while to send out letters!

You misunderstood what I was trying to say. I didn't mean to make penalties higher. Penalty calculations would remain the same, but if a penalty is less than $20 then no penalty will be assessed.

The IRS does this already, even with CP2000 notices. They run the program, sort the notices from high to low for the amount of the notice, then only send out the top ones in a quantity that they know they can handle, and all of the smaller just get skipped.

[Lion EA]

Had a client a few years ago (well, they're still my client) who received an IRS letter that they owed $0. He called me. I told him it was probably rounding, to ignore it; the IRS would figure it out soon. He received a more forceful letter the next month asking for $0. So, he mailed them a check for $0. That was the end of that.

[Catherine]

For a couple of years, MA was sending out "correction" letters with less-than-$5 changes (both directions) but zero explanation. That was fun. Not.

[Slippery Pencil]

In the 80s, the city of Detroit would recalculate the computer printed, rounded to the nearest dollar tax returns to include the cents and reduce the refund.  So if the return showed an $8 refund, the client would receive a check for something like $7.48.  Detroit actually paid people to rework the return by hand.  It was only a one page return and only a few lines had to be recalculated, but I can't imagine how they thought they were making money doing this.

[Abby Normal]

MD calculates to the penny if there are any changes to the return. Drives me nuts.