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Home Fiscal Policy How Much Does It Cost to Pay the IRS a Nickel Owed for Federal Taxes?

1/4/2009 By Ben 2 Comments

How Much Does It Cost to Pay the IRS a Nickel Owed for Federal Taxes?

Did you hear the one about the Internal Revenue Service, a trial lawyer, and loose pocket change? A true – and telling – story in today’s Detroit Free Press:

In mid-November, [Detroit criminal defense attorney James] Howarth received notice that his FICA account, even after an adjustment, was out of whack.

He owed the IRS a nickel. And the IRS was serious.

It advised him to act promptly “to avoid additional penalty and/or interest.”

Howarth started calculating how much that nickel was going to cost him.

As he figures it, there is the 5 cents plus the cost of a check — payment must be made by check or money order. Then there is his CPA’s fee, an envelope, his secretary’s time, his own time and a 42-cent stamp.

“The costs are several hundred percent over the nickel,” he said.

But then a second letter arrived. This one said Howarth had a refund coming.

The amount? Four cents. But to get it, Howarth would have to ask for it because it was less than $1.

“When I owe them a nickel, I must pay them,” he said. “It’s not optional. But when they owe me, I have to ask for it.”

When someone insists on a service being administered by a federal government bureaucracy, you have to question their sanity.

Filed Under: Fiscal Policy, General, Health Care, property rights Tagged With: adjustment, bureaucracy, CPA, Detroit Free Press, envelope, federal government, FICA, interest, Internal Revenue Service, James Howarth, letter, nickel, penalty, pocket change, refund, sanity, secretary, stamp, story, trial lawyer

Comments

  1. Tyler says

    1/6/2009 at 11:51 am

    The lawyer is right and the standard ought to be the same, but who will fund litigation for four cents?

    As a quick aside, my contracts professor was once on hold with Verizon for over an hour. She threatened to bill them her going hourly rate– $450 per hour– if they ever did it again. I would love to see that one played out.

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  1. An IRS Tale of 9 Cents ~ It Could Happen To You says:
    1/4/2009 at 5:42 pm

    […] An IRS Tale of 9 Cents ~ It Could Happen To You in: Opinion, Taxes Big Tip of the Hat to Mount Virtus […]

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