The IRS in Sacramento: a lack of common sense about cents

I’m almost at a total loss for words on this one.

KTXL-TV in Sacramento reports on a car wash owner that got a visit from an IRS tax collector.

Aaron Zeff, the owner of a local car wash in Sacramento, California, was informed of the IRS visit by his manager. From the report:

“I looked at the letter and I couldn’t believe what I saw. The number was astonishing. Four cents,” Zeff said.

Coupled with late fees and penalties – coming to a total of $202.35.

“If we knew anything about it, if we received any correspondence we would’ve immediately addressed it,” Zeff’s attorney, Ashley West said.

And further down:

And whether it’s a half-million dollar debt, or a mere nickel, the investigator said… failure to pay, is a failure to pay.

Just about every other business will write off small debts under $1 (or rough equivalents abroad). One of my former car insurance companies even wrote off a back premium payment of nearly $20. It’s far cheaper to simply write off such small sums than collect on them.

More troubling than that is the absolutely ludicrous and insane difference between the principal and the amount after penalties and interest: a factor of over 5,000. Assumably, this is done with the intent of justifying a collection effort. All this really does, though, is anger the taxpayers, the people whom the IRS (and any government agency) is supposed to serve in the end. I am certainly horrified at this egregious misuse of resources, and no amount of trumped up penalties will make it right in my mind because it’s just plain silly to apply over $200 in penalties regarding a debt of less than a dollar.

For tax scofflaws who owe hundreds, thousands, or even millions in taxes and make no attempt to resolve the debt voluntarily, such draconian and ruthless “squeeze the turnip until we get blood” tactics are justified. Those are the people ripping off our government.

The IRS would do well to apply some common sense to these cents-only debts. Do the same thing so many other businesses do: write them off. We have far worse problems in this country than someone who owes taxes in an amount easily payable in coins.

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