Fine Distinction

Ventura County bureaucrats have learned firsthand what many taxpayers have been complaining about for years: The Internal Revenue Service can be a stubborn, if not irrational, adversary.

IRS officials recently notified Ventura County that it would have to pay $296,000 in penalties for violating new federal regulations.

The reason? County officials did not file $2.96 million in payroll taxes exactly the way the IRS wanted.

The payment was transferred electronically by the March 13 deadline. But due to a technical glitch, the county could not transfer the money in a new IRS payment format.

Using an older format, the county made the payment with the assistance of Bank of America.

That did not please IRS officials in Fresno, who demanded a 10% penalty. IRS officials in Chicago, who specialize in the new electronic filings, thought the fine should be waived.

Fresno prevailed. And county officials found themselves in IRS hell.

So County Treasurer-Tax Collector Hal Pittman fired off a letter to Rep. Elton Gallegly (R-Simi Valley), requesting assistance.

“There has been a great deal of media attention in the last several months concerning various horror stories and activities of the Internal Revenue Service that defy logic or common sense,” Pittman wrote. “The taxpayers of Ventura County can now be counted as a casualty of the arbitrary and capricious acts of the IRS.”

Gallegly went straight to the top--to Commissioner Charles O. Rossotti. After two days of work, including a one-hour telephone conversation with Rossotti, Gallegly said Friday the dispute had been resolved.

Ventura County would not have to pay an extra dime.

“They received the money the day it was due, but they got it in a brown envelope instead of a green envelope,” Gallegly said. “I mentioned to [Rossotti], ‘Hey, this isn’t right.’ And he said, ‘I don’t know all the details, but if what you’re saying is true, this is wrong.’

“The sad part is that taxpayers have to resort to calling me,” Gallegly added. “This was really a no-brainer. But we had to go over Fresno’s head.”

Pittman couldn’t be happier with the results.

“We obviously were not dealing with the kindler, gentler IRS that’s supposed to be in place now,” Pittman said. “We’re happy to say that reason has prevailed.”