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It could happen to you too

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Re: It could happen to you too

#41

Post by dthunt »

joedev wrote: post #34

Why does the author keep hounding on "Again, I have not lived in MA or earned income in that state since 2003"? It sounds like MA isn't after anything to do with residency or wage income.

In fact, that's almost certainly what it is.

They see in 2003 they had a return that owed some money, and no return in 2004, so they assume that the same taxes are due from 2003. Then they do it again in 2005...

This is what happens when your state doesn't have official move-out procedures, etc. They don't know, and they don't mail you until 15 months after you move, so your mail is no longer forwarded, and they make no attempt to contact you a lot of the time.

Re: It could happen to you too

#42

Post by ChuckMcM »

Zimahl wrote: post #37
ChuckMcM wrote: post #27

Sigh. I understand the angst, tax organizations are the worst. However, a piece of advice. If you file a tax return in a state, and then you leave. Make sure you file a tax return the next year as well but put down zero taxable income. What I have seen states do, is take the last year you filed a return "presume" you made that much in the next year but just "forgot" to file, and then charge you for back taxes. You co…

But filing a state return with $0 on it is pretty straight forward thing these days with efiling. It's stupid to have to do that. They shouldn't be estimating your income, they know exactly how much you make from your W-2s, 1099s, etc. This is all to be reported to the state by an employer. As for the guy in the article, there isn't something quite right. The state could be completely wrong here but there is somethin…

Two part response:

"It's stupid to have to do that." - yes it is. However, as the author points out, states are broke, so they do everything they can to maximize revenues. (California is horrible at this, they twiddled two of the digits in my social security number and the first I heard about it was a tax lien filed against my house, really sad.) For a long time not filing a tax return effectively deferred your tax liability until you did. They aren't willing to wait that long any more.

"As for the guy in the article, there isn't something quite right." - Of course not, tax stories like this are always more nuanced than the 'victim's point of view. Combined with the common practice of "interpreting" the statutes to mean one thing or another, its what keeps tax attorneys gainfully employed.

Of the latter my favorite is the "home business" or "hobby" interpretation. Your home business of shipping coal to New Castle may be losing money year after year, but the IRS doesn't technically get to call it a hobby, even if there is no evidence to believe it will ever make any money. People abuse that "loop hole" all the time, it is an opinion of whether or not its a "business" and the IRS isn't technically allowed to make judgements along whether it is or isn't. That doesn't stop them from trying to intimidate people though.

Re: It could happen to you too

#43

Post by HNaTTY »

Similar thing happened to me, but with a much happier outcome. I lived in Iowa, moved to Colorado for a few years, and now I'm back in Iowa. I received a letter that I owed estimated taxes plus interest and penalties and... Ignored it. Then, 6 months later, I got a bill with the email address of the Iowa IRS agent.

One friendly email and four days later, her response was:

Thank you for your response to the Department’s billing notice you received for no record of an Iowa individual income tax return on file for tax year ending 12-31-2005. Per review of your 2006 Iowa return I have verified you claimed a part-year Iowa credit therefore please consider this matter resolved. I am in the process of revising your billing to zero. You may continue to receive notices until our Accounts Receivable as officially cleared the billing.

If you have any other questions please feel free to contact me directly. Thank you for your attention to this important matter.

Re: It could happen to you too

#44

Post by dubfan »

aneth4 wrote: post #13

My personal and business banking is done at Chase. I've found them to be fantastic and managed to avoid pretty much any fees by following the guidance of very helpful employees. I know everyone loves to bag on big banks, but Chase has been great. Bank of America is another story - their website barely works. That said, I highly recommend anyone with significant assets open a bank account in a foreign country where se…

  managed to avoid pretty much any fees by following the guidance of very helpful employees
If their fee structure is so complex you need help from employees to get around it, they aren't "great".

Re: It could happen to you too

#45

Post by [deleted] »

Zimahl wrote: post #37
ChuckMcM wrote: post #27

Sigh. I understand the angst, tax organizations are the worst. However, a piece of advice. If you file a tax return in a state, and then you leave. Make sure you file a tax return the next year as well but put down zero taxable income. What I have seen states do, is take the last year you filed a return "presume" you made that much in the next year but just "forgot" to file, and then charge you for back taxes. You co…

But filing a state return with $0 on it is pretty straight forward thing these days with efiling. It's stupid to have to do that. They shouldn't be estimating your income, they know exactly how much you make from your W-2s, 1099s, etc. This is all to be reported to the state by an employer. As for the guy in the article, there isn't something quite right. The state could be completely wrong here but there is somethin…

[deleted]

Re: It could happen to you too

#46

Post by the_watcher »

ChuckMcM wrote: post #27

Sigh. I understand the angst, tax organizations are the worst. However, a piece of advice. If you file a tax return in a state, and then you leave. Make sure you file a tax return the next year as well but put down zero taxable income. What I have seen states do, is take the last year you filed a return "presume" you made that much in the next year but just "forgot" to file, and then charge you for back taxes. You co…

I moved to Austin in 2011 and have worked here since 2012. I'm going to make sure to do this at the same time I file my tax return here. I don't want to give California the chance to retroactively change what I owe. Thanks for the advice!

Re: It could happen to you too

#47

Post by oasisbob »

niggler wrote: post #5

You should always have assets at multiple banks and have lots of cash stored outside of the banking system (in a safety deposit box, at home, in car, etc). *note: be careful about how you accumulate said cash. CTRs are generated if you withdraw too quickly.

note: be careful about how you accumulate said cash. CTRs are generated if you withdraw too quickly.

This is very bad advice, as it's illegal in the US to intentionally evade CTRs by aggregating smaller transactions. It's known as structuring:

http://www.irs.gov/irm/part4/irm_04-026-013.html

Also, CTRs aren't inherently a bad thing, and they aren't generated behind your back. If you hit the $10k reporting limit, it's a simple one-page form, and you're on your way. Legitimate businesses are required to complete them all the time.

Suspicious Activity Reports (SARs) are filed at the discretion of the institution, are secret, and are independent of the transaction amount. Withdraw $9,990 and you'll probably have a SAR under your name instead of a CTR. Ditto if your deposit smells like drugs, or if you're dealing in large amounts of currency as an individual, and the bank staff can't determine why.

Re: It could happen to you too

#48

Post by jmj42 »

gcb0 wrote: post #16
aneth4 wrote: post #13

My personal and business banking is done at Chase. I've found them to be fantastic and managed to avoid pretty much any fees by following the guidance of very helpful employees. I know everyone loves to bag on big banks, but Chase has been great. Bank of America is another story - their website barely works. That said, I highly recommend anyone with significant assets open a bank account in a foreign country where se…

> and managed to avoid pretty much any fees by following the guidance of very helpful employees shouldn't they not have useless fees to begin with?

I'm not sure the fees are _necessarily_ useless. Banking is a service, and services cost money to provide. I suppose an argument can be made that the fees are higher than they need to be, but then, banks aren't non-profit entities either.

As for me, I've been a Chase customer since 2004 when they merged with Bank One, and a Bank One customer since 1990. I've tried a few local and regional banks, and brief stint with BOA as Bank One didn't have any branches in San Jose circa 2002. I've been quite happy with my Bank One/Chase experience to date. Far more than any other bank if tried.

Re: It could happen to you too

#49

Post by ars »

ChuckMcM wrote: post #27

Sigh. I understand the angst, tax organizations are the worst. However, a piece of advice. If you file a tax return in a state, and then you leave. Make sure you file a tax return the next year as well but put down zero taxable income. What I have seen states do, is take the last year you filed a return "presume" you made that much in the next year but just "forgot" to file, and then charge you for back taxes. You co…

In MA at least you should file a Form 1-NR/PY Nonresident or Part-Year Resident. http://www.mass.gov/dor/forms/personal-income/2011/form-1-nr...

You write on it when you leave the state and then they know you are no longer a resident. I suspect there is something similar in most states.

Re: It could happen to you too

#50

Post by shail »

These are some of the times I feel lucky to be in a developing country. Our government is still behind in developing laws where they freeze all your bank accounts on income tax evasion counts (obviously unless you are a high profile case).

But this is plain ridiculous. Its must be some kind of breach of basic rights. Govt should not be able to freeze accounts unless proven guilty in court.

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