This is a story about the interplay between government, business, taxes, and accounting. Though the details are either amusing or frustrating, depending on your point of view (and how directly you are involved in the story), the real point here is how much it cost a variety of entities to correct a clerical error (or two).
Our company, Hen’s Teeth Network, contracts with Intuit payroll services to handle payroll-related filings and deposits. The process works wonderfully well, and is worth the cost to be sure that the right thing is happening at the right time in the right way. I never have to worry about the process.
Imagine my surprise about a month ago on receiving a firm “intent to levy” letter from the IRS. It declared HTN owed an outstanding amount of $26.31 from the fourth quarter of 2008.
No problem - I called Intuit. Well, HTN was not alone. The Intuit voice mail system directed that anyone receiving such a letter should fax it to Intuit - the problem was already being worked on.
So I faxed and relaxed.
A week or so ago, I received another letter from the IRS - this time declaring that an overpayment of $26.31 had been made and that we would receive a refund - plus the interest owed us.
I faxed that to Intuit, figuring they should be kept aware of what I knew of the situation.
Yesterday we received the promised refund check - with interest - now totalling $26.51. No way can I cash this without being sure it is correct, thought I. So off to fax Intuit again.
Sure enough, I got a call from Intuit saying only bad things would happen if I cashed the check. The payment had been erroneously double-posted. After spending some time on the phone with Intuit, I had instructions on how to return the check with a letter explaining the misunderstanding. Intuit also suggested I call the IRS to be sure they were aware of what I was doing.
So I spent a surprisingly pleasant 20 minutes or so on the phone with the IRS while they chased down what had happened. Indeed, there never was an overpayment (nor an underpayment), but one (or two) clerical errors mis-posting one legitimate payment. Returning the check was essential. They added a couple more details to the instructions on how to do this properly.
At all steps, all parties were doing the right thing. I appreciate that. And I do appreciate that the IRS is as willing to refund overpayments as it is to pursue underpayments. But the cost of the episode far outweighed the face value of the check. Total up the postage both ways, phone calls, faxes, the cost of cutting the check, the cost of labor at the IRS, Intuit, and HTN to deal with each phase of the story, and all for $26.31 (plus interest).
At the moment, it appears that the situation is resolved. But I won’t be really sure until we pass several fiscal quarters without hearing more of it.