The office was a mess. About a week earlier I decided to do some remodeling. It had been a tough twelve months, and I was trying to give myself a lift emotionally.
“A new office with a nice paint job will do you some good,” my wife told me.
We moved everything out of my little office and into the foyer. I set up a temporary work station next to the coffee pot and the dust covered microwave. Half of my files were in the foyer with me, and the other half were just outside the door leading to the factory floor. Fisher (we called him that since we shared the same first name) was experienced at Sheetrock, painting and electrical; since it was a slow week I put him to work making the magic happen.
During any other week I would have been alone for the day. My employees would have been off installing a kitchen. My dad would have been along with them and my wife would have been at home performing a variety of tedious chores.
Not this week. We were all on top of each other trying to get this little project done. Julie was looking things over rendering her decorative advice. Fisher and his brother were hanging rock, and my dad and Johnny were taking care of miscellaneous chores. I was trying to run my small company from a folding table surrounded by dirty appliances in an area normally reserved for foot traffic and warming up lunch.
We heard a knock at the metal front door. We all looked at each other as if to say, “Who knocks on a business door?” I walked over and opened it up and there they stood; two very professionally dressed women. The younger of the two raised what looked like a leather wallet into the air, and let the bottom half drop down revealing her credentials. “Hi, my name is (NAME NOT GIVEN IN CASE SATELLITES ARE WATCHING). I’m with the IRS. Is James here?”
My heart sunk. “Could they have picked a worse day?” I asked myself.
I had a feeling they would eventually show up. The year before, I had quit making my 941 tax deposits in an attempt to keep from making massive and painful changes in our finances. Before I knew it my company was massively in the hole to the worlds most ruthless lender; the Internal Revenue Service.
Not sending in your employee withholding taxes is similar to ‘borrowing’ money from ‘The Godfather’ without asking permission. They will get their money back, with interest. I would have rather taken a beating from Uncle Louie than what happened next.
We spent the next four hours pouring over all my financial files. I could not find a thing! My normally organized office resembled a scene right out of Die Hard. File cabinets and other miscellaneous furniture were strewn about like John McClain himself had been in a firefight with another German terrorist! The only thing missing were the fragments of a downed helicopter!
I nervously dug up every piece of financial documentation they asked for. My employees continued to work. It was the quietest construction site in the history of the world. Draw attention to yourself and you may get audited was probably going through everyone’s minds. Finding anything in a timely manner was impossible. All four of my file cabinets looked the same and now they were spread across two rooms and I could not remember which one I had put where. The two agents sat patiently waiting for me to find what they had asked me for.
“I don’t know how to do a budget”, you say? Spend an afternoon with two IRS agents and you will have your budget. The government has it figured out for you. One of the agents had a nice little form that she filled out for me. It has an allowance for everything. A house that is 50% of your take home pay is not on it. “Sorry, you don’t get to keep that”, she told me. They put a tax lien on it for good measure.
Once we were done I had signed on the dotted line. Again it was kind of like ‘the family’; I was not given a choice. The payments were going to be substantial and they really did not care about any other loans. Those were conveniently left out of the budget so ‘the family’ would get all that was theirs.
That was a little over three years ago. I have gotten a visit from the same agent three times. Every time the economy gave me a kick in the ribs and I couldn’t keep up with the payments, ‘Uncle Louie’ would show up and give me the new budget based on our current financial situation.
Our friendly IRS agent tried to pay me a visit last Thursday. She showed up completely unannounced as usual. I was at work and my dad had the pleasure of greeting her. He had her call me on the phone and she told me we needed to meet. I told her that my company was closed and she gave me a short list of items to bring to our meeting. Yesterday, after class I drove over to her office.
“Since you were able to pay all of the Trust Fund* portion of the taxes we will be able to write off the rest of this as non-collectible.”
I could not believe what I was hearing! I was convinced that I was going to be making payments to the IRS for the rest of my life. The remaining balance was all penalties and interest (a 50% rate) but the IRS has a reputation of getting every penny that they want. Apparently there were some nuances I was not completely aware of.
It was an overcast and rainy day here in Kansas City yesterday, but I could swear that the sun was shining when I walked out to my car after our meeting. I drove strait home, ate lunch and took a two hour nap. This last weekend was my first time off in over a month. Putting this three year financial crisis behind me was more exhausting than the last thirty days of non-stop school and work.
The IRS is out of my life and I hope to never see them again.
*The Trust Fund is the portion your employer holds out of your check and is supposed to send into the IRS for you. The IRS is extremely aggressive in collecting these taxes. They never miss a penny. You can get out of paying those back if you are incarcerated for a felony. Other than that you are going to pay up.
You can hear the full story of my personal debt crisis in episode 5 of my podcast.
http://bluecollarliving.com/podcast-episode-index
After reading that, I’m not even sure I want to comment! I’m 99.999999999% sure all my 941s have been paid on time and in full, but why risk it? Just reading your post gave my heart palpitations.
It seems the past couple years, the IRS has been sending out letters stating this form or that has been filed incorrectly. I think they are all overworked due to this recession and lots of cost-cutting from Washington. It can’t be an easy job from their end as well..
Were you allowed to hug the agent or would that have been assault? Did you risk it? I don’t think I;d have been able to contain myself.
I cannot imagine trying to do her job! Any time I defaulted on the agreement it took them 6 months to catch up to me and set up a new plan. I am sure they are very overloaded.
You can tell she is apprehensive when she would go over the paperwork with me. I am constantly trying to break the ice by cracking a joke here or there. She would look up at me and give a slight grin. It is hard to explain. She did ask about the pets and my daughters. She remembered! Obviously we left her with a positive experience which really is what I wanted. I kept it easy for all of us. I did not get an attorney involved and since I kept VERY accurate records they never felt deceived which I believe made yesterday even easier. She never questioned the facts I was giving her. I gave her this years P&L, my balance sheet and a copy of the sales slip from the company truck. That was it. The rest she took my word for.
When we were done I told her I was writing about it. She said, “You are not going to say I was mean, are you?” I smiled at her and said, “I would never say something negative about an IRS agent.” I got a larger than normal smile from her on that one.
Yes, I did want to give her a hug. The cameras and inch thick one way glass were quite the deterrent.
I did practically dance all the way out to my car!
It would be extra cool if she popped in and commented. I hope she finds here way here and you get your hug. You did a good thing.
I feel a weight off of my shoulders and I didn’t have anything to do with this situation. How great is this?! It proves that doing the things the best you can is always the right way.
Congratulations, James and family!
Thanks, Raun!
I am surprised you didn’t dancd to your car. How did Julie feel?
*dance
Julie is quite happy! We both feel a giant burden removed.
I am so happy for you guys
I was certainly very happy for you when you told me about this last week. Good news indeed, even better when you met with them and confirmed what they had told you on the phone. I think I could end this comment the same way I ended the one in your essay about Jessica.
It does feel good to have this junk behind me!