Stress Is Day’s Deduction for 150 Taxpayers

Tax day has come and gone--as, for most of us, have the tax returns. And the congressional hearings on Internal Revenue Service abuses of taxpayers have ended with top IRS officials pledging reforms.

But “taxagony”--which, for those who are in it, can feel like taxonomy--continues, at least for Mary Carl, 48, of Fountain Valley, who cashed in part of an IRA last year without realizing how big a tax penalty that entailed until she filed her return this spring.

“I paid them $1,000, but I owed over $8,000,” said Carl, a teacher, who decided to take her problem directly to the IRS’s Laguna Niguel office during Saturday’s national Problem Solving Day. “I thought about going to a tax lawyer, but I figured if they could do it [arrange a settlement] for Willie Nelson, they should be able to do something for a little peon like me.”

The monthly problem-solving sessions began last fall largely in response to complaints aired before Congress. Golden said the Laguna Niguel office reviewed about 400 tax cases at the initial event, and that the number of taxpayers--and the complexity of the problems--have declined in each subsequent session.

While the intention of the Problem Solving Days is to help taxpayers resolve ongoing disputes, IRS managers also are tracking problems in hopes of initiating internal reforms to reduce future disputes,’ said Judy Golden, an IRS public affairs officer.

“The entire organization is supporting us in looking at things differently than we once did,” Golden said.

Saturday’s session was open to any taxpayer, but IRS officials focused on small-business owners and included seminars reviewing payroll tax requirements and advice on setting up record-keeping systems and home offices.

About 150 taxpayers made appointments to see about 100 IRS employees Saturday. Some agents were there on overtime, while others took compensatory time or shifted their work weeks to accommodate the public, Golden said.

Carl said she wasn’t worried about her face-to-face encounter with IRS agents. With the national spotlight on the IRS, she said, she expected the agents to be conciliatory.

“I have no fear,” Carl said as an agent brought her a small paper cup of water. “I guess they can be pretty tough. But they wouldn’t dare do anything now.”

But Carl came away dissatisfied. She had thought, she said, that agents could negotiate on taxes owed, which was wrong. She left with a payment schedule that she hopes she’ll be able to meet.

“I thought they had leeway. That’s the impression they give,” Carl said. “They were very nice and sent you off on your way pleasantly, but they weren’t willing to negotiate.”

One taxpayer, who declined to be identified, showed up with his tax lawyer to try to resolve problems that began with the recession in the early 1990s. The businessman, an insurance broker, said his marriage broke up the same time his firm went bankrupt, leaving him with a tax liability of about $50,000, with no income to cover it.

“I can’t buy anything because of the tax lien,” he said. “I tried to lease a car and finally talked them into that. My washer went out and I almost couldn’t get a new washer because of the credit problem.”

He said he and his lawyer Saturday gave IRS agents a proposed payment schedule, and left with a promise that it would be reviewed quickly.

“Hopefully this will get it all taken care of two or three months down the road,” he said. “This is great. I wish they had it two years ago. It would have been over with, and I could have gotten on with the rest of my life.”

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While most taxpayers came in Saturday with a file or two of papers, Michael E. Salemi of Long Beach showed up with a cardboard box.

Salemi, a manufacturer’s representative, said a dispute over depreciation on his and his wife’s tax returns from the early ‘90s has moved slowly through audits and findings. While the amount of taxes owed is relatively small, about $2,000 a year, he said the penalties and interest have reached about $10,000. Most of that, he said, accrued while the three-year IRS audit was underway.

“So I’m paying for the time it’s taking them to audit me,” Salemi said.

In addition, he said, the couple, who also own a commercial building that houses his wife’s hair salon business and some rental space, have spent about $6,000 on tax preparers to represent them during the audit.

He said the intricacies of the case even surprised IRS agents.

“They said, ‘You’re the person we hear about in the news but never see,’ ” Salemi said.

Salemi and others said they were pleased with the treatment they received Saturday. The agent with whom Salemi had an appointment had brought the IRS files with him, which helped as they reviewed the case.

Afterward, Salemi said the agent helped him better understand the process and gave him some concrete suggestions.

“He helped me resolve the audit from 1995 and told me how to address the other issues from 1993 and 1994,” Salemi said. “He got me moving along.”