Why I love the taxman.

Commentary about business and finance.
April 14 2008 5:09 PM

Why I Love the Taxman

Owe the government money? The IRS could be your best friend.

Illustration by Mark Alan Stamaty. Click image to expand.

If there is a day in contemporary American life that in any way approaches the Day of Hate in George Orwell's dystopian 1984, it is April 15. We have holidays that make us come together as a country via our shared history or our admiration for its great figures (Presidents Day, Martin Luther King Jr. Day). But it's only on April 15 that we are brought together by shared loathing.

But I won't participate in the collective scream. Over the last several years, I've come to have an amazing regard for the government's collection arm. Not because of all the wonderful things that government does that the IRS makes possible, but because my experience has been that of all the many organizations you can owe money to, the IRS may now be the most rational and easiest to deal with. Other financial institutions in my life arouse in me only indifference (at best, as with my bank) or annoyance and a vague sense that they are looking for a way to rip me off.

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But the IRS I have come to view with something approaching affection. For each of the last several years, I have owed the IRS money at tax time. And each time, rather than hauling me off to prison, the IRS has done its best to make my life easier.

This love does not extend to state tax departments. A number of years ago, I moved to California and promptly began to have my wages garnished by the California Franchise Tax Board on the theory that since I had not paid any taxes to California the previous year, I must owe them money.

I called up the Tax Board, ready to explain that I didn't owe California any money from that year because I hadn't earned any money in California. This was because in that year I didn't live in California. The bureaucrat on the other end of the line told me that my explanation was fine as long as I lived in another state.

"Yes," I said, "I lived in Washington, D.C."

"So you lived in the state of Washington?"

"No, not Washington state. Washington, D.C."

"D.C.?"

"Yes, Washington, D.C."

A pause, then the triumphant response: "That's not a state!"

I finally resolved the issue by hanging up, calling back, and getting another state employee more willing to accept the possibility that the District of Columbia, while not a state, still falls comfortably in the zone of "places that are not California." For each of the next five or six years, I counted myself lucky that I had to have no further interactions with the tax authorities beyond filing the standard forms and getting my refund.

Unfortunately, the time came when this was finally no longer the case. Three years ago, I found myself looking at a tax bill that—no matter how aggressively I estimated the size of my home office, and however many times I went over my phone bills to make sure to count every call that was "business related"—was well beyond my ability to pay on April 15. Or Oct. 15. Or in any period that would somehow let me hope the IRS wouldn't notice. This kept me up at night, as I envisioned the proverbial jackbooted thugs of the IRS seizing my bank account and hounding me into some modern-day version of debtor's prison. I began having fantasies that somehow Grover Norquist and his posse would dismantle the tax system.

This, however, did not happen, and so I found myself again on the phone with a functionary of the government's revenue-generating apparatus. I expected to have to beg and plead to keep whatever small amounts of cash I might have kept on hand to pay my rent.

But the reality turned out to be different. Years of IRS-collection horror stories and a powerful drumbeat of anti-tax rhetoric had, by the time this happened in 2005, transformed (or maybe cowed) the IRS into becoming a surprisingly customer-focused organization. It became clear after just a couple of minutes on the phone that I was not going to be treated as a scofflaw but as a client, and a surprisingly valued one at that. Yes, I was told I would have to pay interest and penalties. But the sum of those came to somewhere around 9 percent, a rate better than what I was paying on most of my credit cards. And the payments could be stretched out over a surprisingly long period, long enough that the monthly payment would put only a very moderate dent in the unsupportable standard of living I still wanted to maintain.

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