12 Dec An IRS Holiday Tale
When Jill and Il started our non-profit in 2015–Good Contrivance Farm, Inc.–we had the best intentions. It would be an educational enterprise, the farm serving as an example of how and why you, me, and everybody should save small historic farms. The loss of small American farms is manifold and too complicated to discuss here; but, if you drive through rural America you will see the problem clearly enough as you pass farm after farm that lies in ruin or, just as bad, has been sold to developers, and there you’ll see–sitting forlornly on a small plot amid the townhouses or McMansions–the remaining farmhouse.
Our is not yet a working farm because we’ve spent the past four years building the farm’s infrastructure–clearing land, cultivating the soil, fencing the fields, installing water lines and electrical lines, new roofs on the buildings, and so on. Let me be frank: it’s been tough work, very expensive, and a lot of stress on our marriage. On our best days, we’ve been distracted and overworked. On our worst days, we’ve talked about giving up and selling the place. It’d be an understatement to say that we haven’t always been on top of things. That’s why we missed our 2018 non-profit tax filing. The result was a penalty bill from the IRS for $3,480.
Lest you think we’re total slackers to have missed that filing, let me explain. Our accountant at the time had handed our taxes to a young associate, Billy (let’s call him). We assumed that Billy would be taking care of the non-profit filing as well as our personal filing. Billy wasn’t much for communication. He never emailed; he never called. So I had to follow up. If I were in a court of law, I’d swear I’d told Billy to file the non-profit return for us. Billy didn’t file that return. And, distracted by our many farm projects, I never followed up. I guess I was hoping for the best. Either way, the fault was mine ultimately.
We didn’t learn of the absent filing until late summer, at which point I wrote this letter to the IRS:
Dear IRS Administrators:
Enclosed, please find our 990-EZ returns for Good Contrivance Farm, Inc., a 501 (c)(3) for both 2017 and 2018.
It came to our attention, just last week, that we did not file last year (2017). We are very sorry for that. We were under the impression that our accountant filed the 990-EZ and he was under the impression that we did the filing. The fault was all ours. We should have followed up but, frankly, we were so distracted with work on the farm, we forgot to. (When we started the nonprofit in 2015, this quite decrepit farm hadn’t been touched since 1959.)
All if this—running a non-profit—is still new to us. But now, as we move into our fourth year, we would like to assure you that we think we have our act together and would greatly appreciate any consideration you may allow us for this lapse.
Ron Tanner, Director
Good Contrivance Farm, Inc.
To show good faith, we sent this in with half the penalty payment: $1740. Would I be stating the obvious if I said that Jill and I don’t have $1740 just lying around, much less $3480? We don’t have that in the bank either. The farm keeps us pared down to the bone every month.
Typical processing time for IRS appeals is 6-8 weeks, we were told. After that time, I phoned the IRS to check our status. They said they needed 60 days more. By this time, we were well into fall. Jill and I welcomed the 60-day reprieve. Then, sixty days later, we got a registered letter from the IRS. I opened it as eagerly and anxiously as a student might have opened SAT results (back in the day when people still got real mail).
it was a bill for the balance: another $1740 plus $20 in added interest.
“Oh, well,” I said to Jill. “We tried.”
I drew the funds from my credit card and sent in the check.
Unbeknownst to me, the next day Jill sent in a check too. So we had overpaid the IRS by $1740. I didn’t find this out for a week.
You need no more proof than this to see how mentally and emotionally compromised we are these days. I thought I’d told Jill I would take care of it. She thought she had told me that she would.
Jill was convinced we’d never see our overpayment again.
“Of course we will,” I said, “but probably not for six months.”
Every time I called the IRS–to retrieve our $1740 overpayment–I entered the labyrinth of options until a recorded message said, “Due to the very high volume of calls, we are unable to take your call right now . . . .” I decided I’d have to write them a letter and then who knew how long it’d take before we got our money back? All told, Jill and I had sent the IRS over $5,000, a small fortune for us. Jill had $100 left in her bank account and was drawing steadily from her credit line. I didn’t have enough in my account to pay our November bills, so I’d have to draw on my credit line too.
The day before Thanksgiving, Jill gave it a try and, wonder of wonders, got an IRS administrator on the phone. Claire, the administrator, was very professional–you could say “cold”–thoroughly focused and disinclined to small-talk. She requested our EIN and case numbers, asked what position Jill held in our organization (secretary), then asked to put Jill on hold.
When she came back, Claire said, “Your case hasn’t been processed yet.”
Jill looked at me in surprise and I raised my eyebrows in skepticism: just like the IRS to not know what the hell was going on.
Jill explained that we’d paid the second half of our penalty after our appeal was denied.
“You appeal was denied?” Claire sounded surprised, maybe even a tinge disturbed.
“Right,” said Jill. “We thought our accountant took care of the filing but he didn’t–it was miscommunication. That’s what we explained in our appeal.”
“We almost always accept a reasonable appeal,” Claire said. “Yours qualifies. I’ll have to check on that. What correspondence did you get regarding your penalty?”
Jill read the billing letter. Then Claire asked to put her on hold again while she checked the case.
Jill and I exchanged looks of bewilderment. Could it be that we’d get some of our money back?
When Claire returned, she said, “I am going to remove the penalty from your case and we will issue you a refund for the amount you’ve sent us. That will be $5,121.30. It will take four to six weeks to process.”
“Oh, wow,” said Jill.
“The billing statement you received was computer generated–an automatic function that’s supposed to serve as a reminder of your outstanding balance for the case that has not yet been decided.”
Jill’s eyes filled with tears of gratitude: “Thank you–thank you so much!”
“You’re welcome,” said Claire. “You have a good Thanksgiving.”
Jill disconnected, then started weeping with relief as I held her and fought back tears of my own.
If you’ve ever suffered from asthma or a sinus infection or even a severe cold, you know what it’s like when your swollen nasal passages begin to close up and you struggle to draw a single satisfying breath. You may be lying in bed, too aware of your effort, as your greatest inhalation brings only the smallest relief until you begin gulping air like a landed fish and then fight a growing panic as you realize you’re suffocating. It’s a perverse form of drowning. But then sometimes–just as your panic is rising–your nasal passages open up suddenly, surprisingly, and you feel the cool air of relief enter your lungs and you swallow and take another hit of oxygen and say to yourself, “There now, there now, you’re going to be okay.”
That’s what I felt as I hugged Jill.