Paid Too Much Tax? Tough Luck : The IRS offers an expensive lesson in bureaucratic obtuseness

The Internal Revenue Service, having already cemented a reputation as the government agency Americans love to hate, ought to go out of its way to avoid reinforcing a negative public image. Yet that’s exactly what the IRS appears to have done by taking on the family of a deceased Granada Hills man over money that the agency wasn’t even owed.

By all accounts, 93-year-old Stanley McGill was not in full control of his senses when he mistakenly mailed a $7,000 check to the IRS more than a decade ago to pay a $700 tax bill. For anyone keeping score, the accounting clearly shows that the government owed McGill a sizable chunk of change.

That, however, is not how the bureaucratic minds at the IRS viewed it. Under agency rules, the old man lost his money when he failed to apply for a refund within a two-year statute of limitations. When McGill died in 1988, his surviving daughter discovered the disparity and, after meeting considerable resistance, took the tax agency to court.

The government, which won a victory in district court but has since been reversed by the 9th Circuit Court of Appeals, now is appealing to the U.S. Supreme Court. So far the issue that the agency seems most concerned about is whether the IRS or other agencies will be exposed to a flood of claims if they are forced to extend deadlines for disabled applicants.

But is the issue bureaucratic overwork, or fairness? Should a family have to go all the way to the Supreme Court to win back money that is rightfully theirs? Cases like this give the IRS a black eye; it’s no wonder that people get so exercised about the agency.

To paraphrase the old Smith Barney brokerage ad, the IRS seems to be inviting contempt the old-fashioned way: They earn it.