IRS snafu leaves taxpayers, refunds in limbo for months

Jul 2011
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It's perhaps the very definition of Red Tape. Four years ago, Congress decided that the IRS should get into the banking business, authorizing it to give out no-interest loans to first-time homebuyers. That put the agency in the position of both collecting loan payments and issuing tax refunds to the roughly 1 million taxpayers who took advantage of the program.

This year, the odd arrangement overwhelmed IRS systems, and an unspecified number of taxpayers have been forced to wait four months or more for their tax refunds. In fact, many are still waiting.

"This is frustrating for taxpayers, and it's frustrating for us," said IRS spokesman Terry Lemons. "We deeply apologize."

Making matters worse, taxpayers caught up in the vortex say they've been promised delivery dates for their refunds repeatedly, only to be disappointed or to discover their returns have been placed back into "error" status.

read more at: Red Tape - IRS snafu leaves taxpayers, refunds in limbo for months
If any of you happen to be caught up in this SNAFU, you have my sympathy and this should be a lesson to you about the ability of our federal government to screw up a good thing. It's also a good lesson on why the government should be scaled back drastically.

BTW, at the end of the article is a very good tip:

RED TAPE WRESTLING TIPS

Many consumers enjoy the rush of a large tax refund check and use their regular payroll deductions as a kind of forced savings plan. That's a bad idea.

This Red Tape tale is a good reminder to all that now is a good time to double-check your regular payroll deduction. There is no good reason to overpay federal taxes during the year in order to build up a large tax refund. That amounts to no-interest loan to the government, and you are better off keeping that money throughout the year and putting it in the bank yourself. Obviously, it's better for you to receive the interest, rather than Uncle Sam. But perhaps more important, in an economy where even Standard & Poor's is beginning to doubt Washington's ability to pay its bills and where the federal government faces threatened work shutdowns annually, it's bad to trust your money to the whim of Uncle Sam. In the past, state governments have delayed issuing refunds to help close budget gaps — it's not unthinkable that Congress could try that someday.

If you received a large refund this year, that's nothing to celebrate. You should adjust your payroll withholding accordingly, ASAP.
 

NiteGuy

Former Staff
Jul 2011
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Teardrop City
If any of you happen to be caught up in this SNAFU, you have my sympathy and this should be a lesson to you about the ability of our federal government to screw up a good thing. It's also a good lesson on why the government should be scaled back drastically.
C'mon, JoJo. You act like this is all the fault of the IRS. They didn't write the tax laws responsible for this. For that, you can blame the Hor and Senate in 2008 for coming up with this "We'll give out a tax credit that's really not a tax credit, but a loan" fiasco, in an attempt to shore up an already (at that point) failing housing market.

Bitching about the size of the IRS, or government agencies in general, is an excercise in futility, when those agencies are being tasked with dealing with the stupidity of the laws congress sometimes writes. And let's face it - no one's going to cut the size of congress.

JoJoGunne said:
BTW, at the end of the article is a very good tip:
Wait a minute. I don't at all disagree with this, JoJo, don't get me wrong. But the article mentioned two different families with expected refunds of $4700 and $6800 respectively. After their yearly $500 repayment of their new homeowner "tax credit"!

Forty seven hundred dollars, and sixty eight hundred dollars in expected refunds from the IRS? WTF??? I've had to write checks to the IRS since I was in my mid-late 20's. What the hell are they doing (or not doing) to get a refund of that size?

And yes, if they are using their "refund" as an enforced savings plan for the year, they are seriously dumber than I thought. They'd be much smarter figuring out how much of an overpayment that is on a monthly basis, lowering their withholdings by about that much, and putting that additional money in a checking account or buying a series of CDs or something that would not only allow them to keep that money, but get them some interest besides.

Some folks just don't think when it comes to money. Basic personal finances ought to be a required course in high school.
 
Jul 2011
7,153
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C'mon, JoJo. You act like this is all the fault of the IRS. They didn't write the tax laws responsible for this. For that, you can blame the Hor and Senate in 2008 for coming up with this "We'll give out a tax credit that's really not a tax credit, but a loan" fiasco, in an attempt to shore up an already (at that point) failing housing market.

Bitching about the size of the IRS, or government agencies in general, is an excercise in futility, when those agencies are being tasked with dealing with the stupidity of the laws congress sometimes writes. And let's face it - no one's going to cut the size of congress.


Wait a minute. I don't at all disagree with this, JoJo, don't get me wrong. But the article mentioned two different families with expected refunds of $4700 and $6800 respectively. After their yearly $500 repayment of their new homeowner "tax credit"!

Forty seven hundred dollars, and sixty eight hundred dollars in expected refunds from the IRS? WTF??? I've had to write checks to the IRS since I was in my mid-late 20's. What the hell are they doing (or not doing) to get a refund of that size?

And yes, if they are using their "refund" as an enforced savings plan for the year, they are seriously dumber than I thought. They'd be much smarter figuring out how much of an overpayment that is on a monthly basis, lowering their withholdings by about that much, and putting that additional money in a checking account or buying a series of CDs or something that would not only allow them to keep that money, but get them some interest besides.

Some folks just don't think when it comes to money. Basic personal finances ought to be a required course in high school.
You'll notice, I'm sure, that I didn't point out, in my comments, the IRS. I pointed out the federal government. I agree with you that this program was poorly thought out before it was enacted. And, as such, it's a result of the desire for the government to "do something". It's a result of the desire for a government that is too big.
 
Oct 2010
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In the empty heads of the right wingers I own
C'mon, JoJo. You act like this is all the fault of the IRS. They didn't write the tax laws responsible for this. For that, you can blame the Hor and Senate in 2008 for coming up with this "We'll give out a tax credit that's really not a tax credit, but a loan" fiasco, in an attempt to shore up an already (at that point) failing housing market.

Bitching about the size of the IRS, or government agencies in general, is an excercise in futility, when those agencies are being tasked with dealing with the stupidity of the laws congress sometimes writes. And let's face it - no one's going to cut the size of congress.


Wait a minute. I don't at all disagree with this, JoJo, don't get me wrong. But the article mentioned two different families with expected refunds of $4700 and $6800 respectively. After their yearly $500 repayment of their new homeowner "tax credit"!

Forty seven hundred dollars, and sixty eight hundred dollars in expected refunds from the IRS? WTF??? I've had to write checks to the IRS since I was in my mid-late 20's. What the hell are they doing (or not doing) to get a refund of that size?

And yes, if they are using their "refund" as an enforced savings plan for the year, they are seriously dumber than I thought. They'd be much smarter figuring out how much of an overpayment that is on a monthly basis, lowering their withholdings by about that much, and putting that additional money in a checking account or buying a series of CDs or something that would not only allow them to keep that money, but get them some interest besides.

Some folks just don't think when it comes to money. Basic personal finances ought to be a required course in high school.
I've had refunds that size and larger several times in the past 15 years. I purposely claimed single and 0 for part of the year so I would get a large tax refund, or to cover any monies that may be owed, instead of having to write a check to the IRS.

But to the OP: It was the first time it was ever done, and if it's done next year, it will probably have the bugs worked out and be another example of how the government can be more efficient than the private sector when it comes to services. But that's usually the case (and before anyone falsely makes shit up about what I'm saying, I'm merely pointing to areas of government that have been privatized usually having worse service and higher costs. I'd never want to see the government intrude into the private sector either).