Schemes and loopholes: tales from the IRS
ANDOVER, MASS. — After 13 years of answering taxpayer questions, Ellen Murphy nearly tore her 1040 instruction forms in two last week after opening her e-mail inbox.
The taxpayer's message read, simply: "Could you tell me how much I have to pay this year? Thanks." As usual, the expectations for service were grandiose. Yet the omission of a key piece of information the person's name bordered on the absurd.
"People ask sillier things as the deadline gets closer," says Ms. Murphy, an IRS customer service agent in Boston. "They think we can do anything."
By the end of today the filing deadline for most of the country agents at 25 IRS service centers nationwide will have answered an estimated 11 million taxpayer phone calls and thousands of e-mails this year. They have been bombarded with questions and comments that, according to some, redraw the boundaries of human reason.
"Can I deduct my cat?" is a common query in the final weeks, according to agent Monica Petringa, a 14-year veteran.
Frustration prompts other callers to take the moral high ground. "The more upset people will bring up their political beliefs," says Helga Powers, who has handled taxpayer phone calls for four years. "They try to sell you on a new tax plan, telling you 'We can get a coalition together!' "
A palpable intensity hovers over the carpeted, cubicled aisles of the warehouse-sized calling service center here in Andover, Mass. Six hundred agents wear headsets and sit rigidly behind mammoth gray computers as calls roll in, one after another. Stuffed animals line the workspaces, staring vacantly at blue-fabric walls.
Most questions focus on Individual Retirement Account and home-mortgage deductions. But more colorful offerings abound. They usually fall into distinct categories:
Looking for loopholes. Many Americans believe they're missing out on special deals. "I had a man call me the other day asking how he could sign up to be exempt from paying income tax," says Julie Powers.
Taxpayers consistently ask whether income acquired through sperm and egg donations is taxable. "We have to decide if it's a product or a service," says red-haired Rita Frankel, chortling.
When in doubt, people look to agents for ethical clarity. "They call up and say 'I bought a social security number at the corner of, say, 4th and Park can I use this on my form?' " notes Maureen McCarthy.
Bending the rules. Taxpayers frequently claim fraudulent dependents. When pressed, a few insist they are caring for groups of homeless children who won't tell them their names. A husband recently claimed his mistress and her family on his tax return, according to Ms. McCarthy, in addition to his own wife. Many young women try to claim unemployed boyfriends.
Some design their own tax breaks. More than 100,000 Americans have claimed credits as descendants of slaves, according to the IRS. The agency has mistakenly paid more than $30 million to such claimants in the past two years: The tax credit does not exist.
Some states are offering immunity for people who failed to pay taxes in years past. One man recently asked for help in paying taxes dating back to the Kennedy administration.
Filing early and often. Some taxpayers expecting a refund will file early in the year to get their IRS checks sooner. Many expect the refunds immediately and are incredulous when they don't come. Some file three or four more times, agents say. Others call every day.
Agent Larry Callahan has received calls from people standing in line at banks, demanding their checks be deposited instantly. "One woman filed her return electronically at 10 A.M and sent an e-mail at 10:02 telling me her bank hadn't gotten the refund yet," says Ellen Murphy.
Fear and loathing. The IRS and tax season rival the evils of the Spanish Inquisition in the minds of many taxpayers.
"There's the expectation of not being treated with respect and kindness, because the IRS didn't have the greatest reputation a while ago," says agent David Tremblay.
A small percentage are terrified to call. "One woman last week was crying when I picked up the line," says Richard Collier.
Some are so surprised by good service that they send gifts, such as stuffed bunnies, and ask for agents' direct phone numbers. Still, many callers complain about poor treatment though agents mostly stick to a script. "We're constantly accused of being snide, rude, and overly critical," says Ellen Murphy.
Absolute power. Many Americans believe there is nothing the IRS cannot do or does not know. In the midst of e-mail exchanges with customer service representatives, taxpayers often casually ask agents to block all spam sent to their e-mail accounts.
Others believe agents will rewrite the tax law when confronted with reasoned argument. "Some expect we have power to change the law in the blink of an eye," says Monica Petringa. "They'll say, 'That was part of this guy's campaign promise, wasn't it?' "