The name says it all!  Interesting true stories related to taxes and bookkeeping, little known facts and other things that pop up from time to time.

I have a terrible fear of running afoul of the IRS.  I've heard about tax audits; having to drag boxes of illegible, yellowed receipts to some interrogation center where you explain every scrap of paper to a board civil servant who doesn't believe anything you say.  No thank you.  I don't need that.  I pay my taxes religiously.  I'm as honest as the day is long.

Or at least I thought I was.  Then I got this letter:  "Fraud Penalty Added - See Code 05 on Enclosed Notice: $6.00"  I immediately read Code 05.  It said: "A penalty has been added for fraud."  Pretty straight forward, I thought.  There was no explanation, however.  So I called the 800 telephone number mentioned in the letter.  It was answered by ... let's call her Mrs. Service.  I asked Mrs. Service how I could have committed $6 worth of fraud.  She didn't know.

She said that if I disagreed I could contact the IRS Adjustment Office.  I would have to write a letter describing the entire circumstances of my claim, and include a copy of my income tax return.

"That seems like an awful lot of work for $6, I said.  "Can't you just give me the telephone number of the Adjustment Office?"

"I don't have that," Mrs. Service replied.  "But I only want to know how I could have committed $6 worth of fraud."  "I'm sorry," she said, "I don't know."  "Who might know?"  "Can I talk to your supervisor?"  "She's not available?"  "I don't know."  "Could I please have her name and phone number?" I asked.  "I don't have that," Mrs. Service replied.  "You don't know the name and telephone number of your own supervisor?"  "If you'll give me your name and number, I'll have her get back to you."  "How can you have her get back to me if you don't know who she is?" I asked.  "If you give me you name and number, " Mrs. Service replied, I'll have my supervisor get back to you."

"Really?"

"Yes."

"Today?"

"Yes."

So I gave my name and number.  This was at 8:45 AM.  I sat by my telephone the rest of the day, but nobody called.  At 5:01 PM, I picked up the "Scarlet Letter."  You may avoid additional interest and penalties if you pay the amount you owe by July 18th."  That sounded ominous.

Would Mrs. Service's supervisor call me before July 18th?  Should I write to the IRS Adjustment Office?  How many drafts would it take me to write down the entire circumstances of my claim?  What were the circumstances of my claim, anyway?  I could hire an attorney, but even at a modest $60 an hour, a lawyer would have to solve the mystery in under six minutes for me to come out ahead.

So much for my options.  Recalling that old adage about death and taxes, I wrote out a check for $6.

I still don't know why I'm a fraud, but let's estimate that there are 115 million taxpayers in this country.  Let's say the IRS does this sort of thing to two percent of them each year.  At $6 each, that's about $14 million.  Now let's say that Mrs. Service makes roughly $22,000 a year.  That means the $14 million the IRS collects every year from frauds like me can pay the salaries of 600 employees like Mrs. Service, who cannot or will not answer the questions of those who call the number provided by the IRS to answer taxpayers questions.  Don't you just love it?

By W.D. Erhart