Announcement

Collapse
No announcement yet.

Dysfunctional States

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Dysfunctional States

    It is no secret that state budgets are suffering. The lion's share of meeting their budgets are not cutting spending, but first squeeze their revenue departments for as much money as they can get. When it doesn't work, THEN the states look around for corners to cut spending.

    The state revenue departments are responding to taxpayers in ways that are less than ethical. I first noticed it in Tennessee, where several clients began receiving assessments 2-3 years ago that were totally fabricated. No area of taxation was above these efforts. Fictitious estimated tax penalties, privilege tax penalties and assessments, corporate tax miscalculations, etc. It can't be simply a matter of making mistakes when 100% of the mistakes are against the taxpayer and in favor of the state. And, of course, each deficiency notice carries the threat of levies. I have spent a great deal of time defraying these errors.

    A couple clients have far-flung tax liabilities in other states. I have found that Tennessee is not the only state engaged in this behavior. Here are a few other traits, many of which border on or exceed unethical behavior:

    a. Digging up old liabilities (perceived or actual) from prior years, even exceeding the statutes.
    b. Curtailing telephone support, in some cases discontinuing.
    c. Ignoring correspondence, or electronic communications.
    d. Manning their offices with substandard personnel who are not trained in the taxes they administer.
    e. Mandating electronic filing on websites which bias the tax liability on a number of issues.
    f. Ignoring or not processing refunds.

    I would like to hear strategies from the group as to how best to deal with this.

    A couple of my strategies:
    a. Always OWE taxes. Never overpay. You may never collect the overpayment.
    But do not underpay to the extent you will be penalized for estimated taxes.
    b. When you can't collect a refund, rather than writing letters or making phone calls,
    simply claim the refund as an amount applied from a previous year on the next
    return. This is GUARANTEED to get their attention when nothing else will.

    Others?

    #2
    Add Massachusetts to that list. The state boasted increased tax collection. Amended returns seeking refunds are being processed very slow. Phone support is useless. State is holding up refunds on some e-files until you send them a copy of the W2 or 1099-R showing actual MA tax witholding. What is the point of e-filing if they want to see the physical form??

    This is just the beginning. As states figure out more ways to squeeze taxes out of its residents it will get worse.

    Time to retire to Florida!
    Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

    Comment


      #3
      I own a broker/dealer;
      California, Washington and Colorado all sent me notices that I owed them money on revenue earned in their states. We have ZERO clients in any of those states let alone brokers. Washington even sent me a bill they had come up with after I told them this.

      Comment


        #4
        States

        I personally received a bill from PA this year for 1989. Asked them for back up papers for why I owed them. They said they did not have any but I must pay them any way.
        Moved from PA in 1985.Have not heard from them since.

        Comment


          #5
          Yup, NYS is asking for copies of W2s on a couple of clients and is holding refund too.
          This post is for discussion purposes only and should be verified with other sources before actual use.

          Many times I post additional info on the post, Click on "message board" for updated content.

          Comment


            #6
            Originally posted by Snaggletooth View Post
            ...
            The state revenue departments are responding to taxpayers in ways that are less than ethical.
            a. Digging up old liabilities (perceived or actual) from prior years, even exceeding the statutes.
            b. Curtailing telephone support, in some cases discontinuing.
            c. Ignoring correspondence, or electronic communications.
            d. Manning their offices with substandard personnel who are not trained in the taxes they administer.
            e. Mandating electronic filing on websites which bias the tax liability on a number of issues.
            f. Ignoring or not processing refunds.
            If I put the emphasis on "less than ethical", I wouldn't necessarily include "curtailing telephone support" in the list. There has to be a limit on their support budget. If it's curtailed to unreasonable hours or to the point where response time is uniformly unacceptable (e.g. 80% or more of calls having a wait time of more than 15 minutes), then I might. But there's a qualitative difference in my mind between merely reducing the telephone support budget and biasing the online website against the taxpayer.

            For ignoring correspondence or refunds, I'd be careful to distinguish deliberate action from overworked staff. In other words, temper any blame attributed to the lowly bottom-tier workers.

            As for substandard personnel, that's standard politics. Government jobs have trouble competing with the private sector to keep good people. That's too systemic a problem to be branded unethical, other than in a complex argument about the way legislatures fund these jobs.


            Originally posted by ATSMAN View Post
            Add Massachusetts to that list. The state boasted increased tax collection. Amended returns seeking refunds are being processed very slow. Phone support is useless. State is holding up refunds on some e-files until you send them a copy of the W2 or 1099-R showing actual MA tax witholding. What is the point of e-filing if they want to see the physical form??
            Phone support has always been poor, and I have no data about amendment processing times. However, the copy of the W-2 or 1099-R can be reasonable. The MA employer reporting system is quite different from the way W-2s are reported to the IRS via the SSA, making it error prone on the employer's side. It's also one of the areas of fraud. With the flat tax rate, any W-2 or 1099-R showing much more than 5% in withholding rightfully demands scrutiny, as does any that they can't match up.

            This is not to say that all such requests are reasonable. But programming their computers to kick out the questionable ones, with zero false positives is an unreasonable expectation - it's a very difficult programming problem.
            Last edited by Gary2; 07-14-2014, 12:57 PM.

            Comment


              #7
              Unethical Indeed

              Gary, you are usually quite knowledgeable and even now present reasons which are reasonable to those of us who don't know better. But I can't buy into it. The budgetary restraints you speak of are the result of budgets that have been intentionally cut in half (or less) or in some cases even discontinued. In some cases the Revenue people decide to slash personnel because IT people tell them website reporting will make their jobs expendable. Ultimately, there is truth in this but the "expendable" part occurs before the bugs are out or there is sufficient taxpayer learning curve.

              I've been working with various states over the phone for 30 years, and whereas support has never been "good", it was usually workable. Today it is practically worthless. As preparers, I don't think we have ever expected complex tax issues to be effectively addressed by first tier telephone personnel, but today's people cannnot even understand the basics.

              I'm not familiar with Mass but have experienced the horrors of dealing with NY and NJ. Whereas it was historically difficult for the state to compete with private industry for quality personnel, this has changed "down here." Today private industry in our town is Wal-Mart, Home Depot, and McDonald's. Many people are wanting to work for the state just to make a living wage, have job security, and medical insurance. I deal with my share of incompetents in the state but they do have a pool of increasingly more qualified people to choose from - more than ever before.

              Comment


                #8
                Perhaps I'm just uneasy with tossing around the label "unethical" when it comes to legislative budgeting processes, though I'll admit to willingness to use terms such as broken or incompetent.

                If it's unethical for a legislature to cut funding of DOR telephone support to the point of 45 minute wait times, what do you call it when a legislature refuses to extend Medicaid to people who are otherwise forced to live with illness or will even die as a result of falling into the crack where they can't get insurance? (And no, please don't get into that debate. I'm just pointing out that we should be cautious in applying emotional terms to political arguments.)

                Comment


                  #9
                  MA was issuing state refunds for e-files within 3 business days and I think they got burnt! So now to counterbalance fraud they want the taxpayer to send copies of W2 and 1099-R showing actual witholding before releasing the refund. The problem that I have is the letter they receive. It implies that the return was submitted wrong without all the information required by them to process. In other words the tax return e-filer screwed up!That is simply incorrect because we receive e-file acceptance before that letter is sent. If it was incorrect why did MA DOR accept the e-file??

                  I have no problem with MA making sure people are not scamming the system. If that is the case, change the e-files rules and make the taxpayer attach a pdf of the W2 and 1099-R with the e-file or don't be in a rush to issue refunds that soon.
                  Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

                  Comment


                    #10
                    Originally posted by ATSMAN View Post
                    MA was issuing state refunds for e-files within 3 business days and I think they got burnt! So now to counterbalance fraud they want the taxpayer to send copies of W2 and 1099-R showing actual witholding before releasing the refund. The problem that I have is the letter they receive. It implies that the return was submitted wrong without all the information required by them to process. In other words the tax return e-filer screwed up!That is simply incorrect because we receive e-file acceptance before that letter is sent. If it was incorrect why did MA DOR accept the e-file??

                    I have no problem with MA making sure people are not scamming the system. If that is the case, change the e-files rules and make the taxpayer attach a pdf of the W2 and 1099-R with the e-file or don't be in a rush to issue refunds that soon.
                    At the MASocEA conference, I believe it was mentioned that DOR was soliciting suggestions on improving the letters they send out. I'll have to check with others more closely connected to see if there's an actual contact.

                    Comment

                    Working...
                    X