I am sharing this lengthy story, only because someone else might end up in the same situation someday. So perhaps hearing about our small mistake that turned into a big ordeal, will help someone else to not make the same mistake.
My husband has always handled our taxes. It’s just not something I normally dealt with.
In 2007, he filed our state and federal taxes as usual. We were owed a small refund from the state and we did not receive it. He called about it a couple of times, but we still never received it. We were having a lot of issues with the mail delivery at our home around this time and both of us wondered if it had been lost in the mail, or what. I recall nagging him about how he “needed to call the state again and find out where our refund is”. But after those initial attempts, he stopped trying, and I didn’t attempt to step in and figure out what was going on. I had plenty of other things on my plate at the time.
Fast forward in time, to the beginning of 2012. In January, we received a letter from the state, claiming that we did not file a state tax return at all in 2007 and that we needed to do so. Obviously, we knew that was incorrect. So my husband called the number on the letter and told them that we in fact had filed the return and were owed a refund that we never received. They told him that it had been too long to get the money that we were owed, but that we needed to send in a copy of our return from that year.
So obviously you need to keep your tax records for longer than the normally advised 3-4 years.
We do. We keep all of our income tax returns. My husband has stored them in two different places. One spot had all of our returns prior to 2007, the other spot had all of our returns since 2007. And….. you guessed it… as our luck would have it, he could not locate our returns from 2007. Not state or federal (as he always stores them together). I am sure they are here someplace, but he cannot find them.
My husband called the number on the letter back, to ask them what he should do since he could not find our copy of our return for that year. Person says, “Let me look that up and see what is going on with it.” Person then goes on to tell him that they have found our return and that yes they see that we did file that year, we were owed a refund. So no we do not need to provide a copy. Person also says that it has been too long for them to issue us the money we were owed now, but that everything is settled and they do not need anything from us.
Fast forward many many months, and we get a letter out-of-the-blue in the mail stating that we owe the state over $800 in taxes and late fees for…. you guessed it… 2007.
Oh, and it’s due in two weeks or they can take action against us. TWO WEEKS. Hello????? I don’t have a spare $800 laying around and I am seriously ticked off that they didn’t send our refund and were now claiming that we owed them money.
So at this point, I get involved. I call the number on the letter. I speak with a not-so-nice woman who tells me that how this all got started is that in January federal sent state a list of people who filed federal returns listing an address in our state, and they double check that list against their list, and their list showed us as not having filed ……. so they “made up” a return for us.
I said (in my you-have-to-be-kidding-me-voice), “You made up a state return for us?”
She said, “Yes, that’s what we do when someone doesn’t file, we make one up and send you a bill.”
I said, “Well, if you had our information, then you should clearly be able to see that we were owed a refund that year that we did not receive. So how did you come up with us owing you money?”
She said, “Because unless you file a state return, we cannot possibly have your W2s and we do not know what you earned or what you paid in, so we make one up.”
I said, “So you just pull mythical numbers out of mid-air and create a made-up return, based on no facts, that conveniently comes out to show that we owe the state money?”
She said, “Basically, yes.”
Now, I’m assuming to anyone with any level of common sense, that makes no sense, right?
And by the way, I typed the words “unless you file a state return, we cannot possibly have your W2s” in bold, because that is something I want you to remember here in a moment. It’s something I questioned her heavily on, and she insisted there was NO WAY they had our W2s, “since we didn’t file a state return that year” (according to her).
Then, I ask her why we were told in January that they found our return and everything was taken care of. She tells me something like, “Well, I have no way of knowing what someone else told you, I only have what I can see here and it shows that you did not file a return.”
I ask her what we should do since we cannot find our 2007 state or federal returns. She said to call the employers that issued W2s and ask them for copies. Now this was fun. Tons of time on the phone with my husband’s two employers that year trying to get them to dig out old copies of returns from 2007.
They both said, “2007, are you sure? I didn’t think they could go back that far?” And I replied, “Yeah, me neither.”
One employer told me they didn’t even keep them that long, but thank God she found them “out back in a storage building”. She told me that she would put it in the mail to me that day. The other employer told me that there was “a process” to go through to get W2s that old, and that it would take at least 2 weeks for them to mail them to us.
So I call the lady at the state tax dept. back and tell her what I’ve been told, and that there is no way I can have all the documentation that I need before the due date, but that I am working on it. She tells me to call a different department, and explain the situation to them and let them know what is going on, and that we are working on it.
So I do.
I talk to a guy – we’ll call him Randy (not his real name). Randy was very nice. Randy takes my info, pulls us up in the computer and guess what Randy finds. All of our W2s for 2007. Now I find that interesting, because I’d just been told by the previous tax person that there was “no way they could have our W2s without us filing a return with them”.
So I say to Randy, “So by the state’s own explanation, isn’t the fact that you have my husband’s W2s, proof that we filed a return that year?” Randy says Yes, and he isn’t sure how they got them since they aren’t showing our return. But that all he knows is that they have them, but they are still showing us as not having filed a return that year. And he too, has no idea why we were told in January that they found the return. But he says it is obvious we weren’t trying to get out of paying our taxes.
He says to file a new return. He directs me to a state website to do them online. He punches our numbers in (the ones they had all along on the W2s) and he says that we owe the state $33. Now I know this is not accurate. I know we were owed a refund. But $33 sounds a whole lot better than over $800. And I tell him as much. At this point I was totally willing to pay $33 to make it go away and stop receiving threatening letters.
I agree to fill out the online form, print it off, and mail it in with $33 and we get off the phone.
I was telling my mother about all of this nonsense and she said, “Debbie, I have my forms from 2007. Do you mind if I take your numbers and see what I come up with?” I said, “No, that would be great.” And I gave her the numbers that he had just given me. And guess what? My Mom calls me back and tells me that yes, we were owed a refund.
Apparently there was a family tax credit in our state that went into effect starting in 2007. How much of a credit you got was dependent upon your income, but almost everyone was eligible – including us. My Mom advised me to call him back and see if he was forgetting about the family tax credit, since it started that very year.
So I did. He looks it up and says, yes, my mother IS correct. He did forget about the family tax credit. And he notices that the online calculator (the one they advise everyone to use) is not giving ANYONE the family tax credit. (Interesting little side note there, huh? I can’t help but wonder if that is an accidental oversight on the website, or a convenient way for the state to get more money than they should. I’ll file that under: Things that make me go hmmm…..) Anyway…
I ask him if it’s ok if I fill out a paper return instead, using the numbers he gave me, but the way my Mom filled it out, giving us the family tax credit that clearly my husband had given us when he filled the papers out 5 years go – which is how he came to the same conclusion that we were owed a refund. Randy says yes. He says to mail it to “Attention Randy” and he will fix this mess for me himself. I ask him (since we’ve been told before that it was corrected and it wasn’t) if he would be willing to provide me with a letter stating that we do no owe any taxes. He says, absolutely and that he will get a letter out to me as soon as he handles our return.
I get off the phone relieved and thinking all is well.
About a week later, we get a letter in the mail from the state tax department. I think “Great, here’s our letter documenting we don’t owe anything.”
I open it up, and …. guess what…. it’s another bill for $800 !!!!! Not only is it another bill, but it says that because we did not pay the $800 by the previous deadline, that it has now moved further up the ladder to a “notice of assessment” against us in the amount of $800. And if we do not pay it right away, that they will take further action against us.
And of course this has to arrive on the weekend, when I can’t call anyone to find out what is going on.
When I can, I call them back. I ask to speak to “Randy” and I am told that he’s on the other line and they can have him call me back. At first I say yes, but then I decide that I am way too annoyed about this to wait for an answer, so I ask her if there is anyway she can help me. We will call her “Marie”. Marie was really nice. I asked her what had happened, had Randy not processed our newly filed return?
Marie pulled up our account and she said that Randy had processed our return, but that Randy had not given us the family tax credit AGAIN, and that was why they were still showing that we owed money. Now this makes no sense for 2 reasons. One – even if we did still owe money without the family tax credit, it would have been the $33 he had first quoted us, NOT $800. So I still don’t understand why we were getting letters for $800. And two – why would he forget the family tax credit, when it was clearly written into our return? I don’t have those answers.
But, Marie was really nice and says she will fix it while we are on the phone. Marie says she fixed it. Of course at this point I trust what no one says, and I ask her for something in writing.
She told me that she would send us a letter stating that we were owed a refund for 2007 that we did not receive, that has now been denied due to it “being too long” for them to issue us a refund.
(Don’t you find it “interesting” how if you owe them money after 5 years they could still come after you, but when they finally acknowledge they owe you, they don’t have to pay you “because it’s been too long”. )
Anyway, I was cautiously optimistic this had finally been corrected.
Yesterday, the papers arrived in the mail. So now we finally have something in writing showing that it was them that owed us money, not the other way around. Thankfully! And it only took 10 months, and countless hours on hold on the telephone.
So… moral of the story folks:
If you are owed ANY amount of refund on your taxes (no matter how small) – DO NOT let it slide if you do not receive it. Hunt them down and badger them, because they might come back 5 years later and try to say that you owe them.
In short: Zombie taxes can rise from the dead. Refunds do not.