What A Day Rant

[Burke]

1. Former client calls and has another letter from IRS. She didn't file for 2009 (hasn't filed in years due to income) when she up and cashed in 2 IRA's and an annuity and gave the $$$ to her daughter. We filed last spring on 2 of them (all I was given). IRS now assessing FTF and ARP's, and addtl tax on the 3rd one. What's up with these people - didn't custodian ask if she wanted taxes taken out at surrender? When I asked her to drop letter off, I could not locate, she says she dropped in first box in office building (EA is next door to me). He says no, nothing. Finally get her on phone again today after 5 days, and find out she dropped off at old office I left two years ago. Went down there, got bldg mgr to let me in (still vacant) -- there it is on the floor.

2. Current client, elderly foreign gentleman, calls to ask help in reporting annoying, harassing phone calls. Can't get thru to phone company live person. I am only one he knows to call. Sheesh. Solved his problem.

3. Current client, elderly person, cashes in $145K annuity paying him guaranteed 3% and puts it in bank checking account earning .01%. I give up. Going home and belting down a drink.

[erchess]

Hey Burke

I think we have all had days like yours. I had a client who I found out was behind paying sales tax to the state and when I pointed this out he said "So I owe the government. Isn't that kind of like owing yourself, no big deal?"

Regarding your first client I am sure you will do all that can be done at this point and collect a reasonable fee for all your time. Can they really charge FTF when a return was filed? Regarding your second client, how did you help? I think that's amazing. Regarding the third client I think I might have done as he did. The annuity bore the risk that the insurance company or just that annuity would fail. Usually in my experience those guaranteed annuities go up more slowly than the market if the market does go up. The idea does not please me. I'd rather be in the bank or in US Treasuries.

I hope you enjoyed your drink.

[Burke]

Regarding your first client I am sure you will do all that can be done at this point and collect a reasonable fee for all your time. Can they really charge FTF when a return was filed?

Well, I don't know. Can they? We filed, but late after receiving their letter saying they did not have a tax return. BTW, if they had told us what info they had at the time as to income, we would not now be trying to resolve addtl tax and penalties.

Regarding your second client, how did you help? I think that's amazing.

I was able to get thru to live person, got info on how to contact caller (*69 for #), and toll free # for reporting harassing calls, etc. He just did not know how to work around the phone tree. I go straight for the operate ("0") or wait and do nothing until a live one comes on the line.

Regarding the third client I think I might have done as he did. The annuity bore the risk that the insurance company or just that annuity would fail. Usually in my experience those guaranteed annuities go up more slowly than the market if the market does go up. The idea does not please me. I'd rather be in the bank or in US Treasuries.

Well, it WAS AIG, then bought out by Western Natl Life. I think it was okay. He was drawing the income monthly. Had already been through a cash surrender and reversal of same annuity last year.

I hope you enjoyed your drink.

Absolutely.

[Gary2]

FTF is an abbreviation for "Failure to file", which is short for "Failure to file on time". Perhaps it would be less confusing if they called it the "late filing" penalty.

[taxmom34]

the custodian does ask if taxpayer wants withholding and if they say yes , when they get the 1099R they think that because they had withholding its already accounted for and don't claim it (cause they already paid taxes on it). someone needs to educate those people that it's the same reporting as a W2.

[RitaB]

Yep

the custodian does ask if taxpayer wants withholding and if they say yes , when they get the 1099R they think that because they had withholding its already accounted for and don't claim it (cause they already paid taxes on it). someone needs to educate those people that it's the same reporting as a W2.

I hear it four times a year. Oh, I already paid taxes on that.

[JoshinNC]

Not all annuities are the same

[QUOTE=erchess;127784]Regarding the third client I think I might have done as he did. The annuity bore the risk that the insurance company or just that annuity would fail. Usually in my experience those guaranteed annuities go up more slowly than the market if the market does go up. The idea does not please me. I'd rather be in the bank or in US Treasuries.[QUOTE]

It sounds like the TP was in a "fixed, guaranteed" annuity paying 3%. Essentially a fixed, guaranteed annuity pays just like a bank CD, a fixed rate, no "investment" component, no fluctuations with 2 key differences. 1) An annuity is not FDIC insured. This scares some people. In NC (where you are) there is a state run guarantee for annuities that covers all annuities under one insurer for each contract owner up to $300k, so the TP's annuity, if an NC resident, was under no chance of "default", and 2) Annuity earnings aren't taxed until distributed, so no 1099's if no distributions.

IMO, this was a dramatically bad decision by the TP and he/she will regret it tremendously in a few years.