The IRS has taken a lot of heat lately. It now seems beyond doubt that this supposedly apolitical organization targeted opponents of the president. By seeking the protection of the fifth amendment its representative Lois Lerner implied her testimony on unfairly targeting Americans may have landed her in jail. But you do not have to be an American to fear and loath the IRS. Foreign governments, citizens, and even Americans abroad are frequent targets of the cash-hungry arm of the US government. This includes yours truly.
In 2011, a year after I left the states, I sold stock I had held for many years. Because of my international address my broker made the conservative assumption (in terms of their legal protection) that I was not a US citizen. I had not filled out the documentation to prove otherwise. They therefore double-witheld taxes from the sale’s profit. It took me 18 months to get the IRS to refund my over-payment. When the IRS repaid me with interest I was reasonably pleased. But then things got very bad.
Several months after issuing me a refund, someone in the IRS reviewed the payment. They had records of refunding half of the doubly-witheld taxes. But the documentation they had justifying that refund no longer met their requirements. On their second review, they decided my request was not valid. But because they had already sent me the money without proper justification this was now potentially a crime. When the IRS mistakenly takes your money, it falls to you to get it back. When the IRS mistakenly pays you money, it falls to you to clear yourself criminal charges.
About four months ago I received a dreaded letter with vague accusations that I defrauded the IRS. In that document they explained that I had not sufficiently proven they should return part of the doubly-witheld tax. Of course they could have said “no” to the first request and forced me to gather more documentation. By by saying “yes” and then later changing their mind, they had the opportunity to invoke the threat of criminal prosecution.
After half a dozen midnight calls to my broker (midnight my time is when they work) and dozens of emails I had the documentation I think will clear my name. The IRS now has a copy. Let us hope the next letter I get formerly clears me of any wrongdoing.
As my case continues, I am cautiously amused as current public IRS debacle. It angers me that IRS mistakes force individuals into terrifying positions where exoneration is so challenging. It upsets me that this is happening to me, specifically. And I can only wonder how many other people have committed a clerical error that earned them a terrifying sequence of correspondence from the IRS. But I must admit a sense of schadenfreude as the IRS struggles to clear its name from a likely bureaucratic flaw. Jon Stewart, in summarizing the IRS’ recent woes, said it best: “Where’s your receipts, A$$hole?”
Citizens and green card holders of the United States are among a small category of people that owe taxes to their home country when living abroad. In my travels I have met a couple Americans that were dodging these taxes. And believe me my recent troubles give me good reason to question what information I share with Uncle Sam. But as bad as my recent engagement went, I can only imagine my living hell if I actually actually done something wrong.
The last few weeks I have been writing on personal development and my experiments towards wisdom. Along that vein, I will close with the following words of wisdom. First, people may like it when a bully gets slammed to the ground. But the system that created that bully still exists. He will return.
And second, never fuck with the IRS.