Could Have Eased Refunds

I strongly disagree with Stanley Mumford’s July 27 letter (“IRS Helps on Refunds”), in which he states that the IRS was most helpful in obtaining refunds of taxes paid on portions of the distribution of Pacific Telesis stock by AT&T.;

The IRS advised taxpayers that they must include the alleged taxable amounts in 1984 income, even though AT&T; vigorously disagreed. I quote from a section of the IRS notification letter: “The IRS will track these additional dividends in order to detect instances of under-reporting, which may subject your return to additional tax liability.”

Under the best interpretation, the IRS letter was intimidating. When the tax court overruled the IRS interpretation, the IRS sent each taxpayer an amended tax return form, 1040X, with “AT&T; claim” stamped on it. The taxpayer was to prepare the 1040X return and send it in to receive a refund.

If the taxpayer had his return prepared professionally, he would normally go to his preparer to have the refund form completed. In most cases, the amount of the refunds are so insignificant that preparers’ fees would be more than the taxes to be recovered.

There will be hundreds of thousands of AT&T; stockholders who will not submit form 1040X.

If the IRS had the ability to track those “additional dividends” and subject the return to additional tax, why don’t they have the ability to refund the tax that they erroneously collected?

C. J. MALLEY

Anaheim