The IRS Is On My Speed Dial

I've wanted to write this story for decades, since I lived on Ruff Life in Puerto Rico.  There's so much bad blood concerning the IRS going around, people decrying the evil agency and its lackeys; and how, by increasing its overall budget, once more the government is out to get us.

Hogwash comes to mind; yet admittedly I'm far out of step with how things work, so I'm sure things are different now.  I can only relay MY experience, with the hope that the IRS still has a smidgen of the compassion I witnessed back in 2002.

After 9/11, tourism in Puerto Rico all but dried up.  Everyone on the island was struggling if not outright fleeing, and Volantines, our kite shop, was threatened.  We weren't the typical 'boaters' who planned extensively for their cruises and generally had the money to maintain their boats and enjoy themselves, you've seen the ads.  To pay for Ruff Life,  I'd taken an early withdrawal from my IRA but didn't bother with the taxes, since my midlife crisis was about to take off and I needed every penny.

At the Florida lawyer's office, while Cap and I drew up pre-departure wills, I explained what I'd done, assuming privilege like a Priest.  What'll happen to me when they realize?

"That'll take at least a year," she replied; and since we didn't expect to be gone longer than that, I relaxed.

"Besides, they'll have to find me first."

Sure enough, they did; and not only did they hit me up for the unpaid taxes, they added a $20,000 "Shame on You" penalty.  I was dead.

I'd already maxed-out all my credit cards and the boat kitty was all-but-empty, so I went to the IRS office in Mayaguez and flung myself on the mercy of Sra. Gonzalez (not her real name), who was fluent in English.  You know me, honest to a fault (with fingers crossed this post doesn't get me into hot water), I told her the truth.

"Can we make a deal?"  I was afraid they'd take the boat but Cap's name was also on the title, so I was hoping they wouldn't throw the both of us out.

"Well, first of all, we won't take your boat, it's your home; plus it's jointly owned, so if anything they'd put a lien on your portion only.  The IRS has been gettting a bad name, so our policies are changing,"  to become a a kinder, gentler ogre.

She continued, "Also, once you receive a letter from us, you have 6 weeks to answer.  Then they have 6 weeks to respond.  Then you get another 6 weeks, so this can go on for quite some time."

Stalling's great, but the interest will keep racking up.  She helped me set up a payment plan, just over $100 a month (their absolute minimum), might as well've been a million, but I'd try.  Sra. G., a truly lovely woman, was always available and helpful, and as the title of this post suggests, she was on my speed dial.

It didn't take long before I couldn't make their payments, so I offered up all I had left: $9,000 remaining in my IRA.  It was a fraction of what I owed the IRS but Sra. G. said no matter, we should try, and filed the paperwork for a settlement offer.

Cap and I were already having trouble keeping our heads above water, but after 9/11 it became next to impossible to make ends meet.  I contacted each credit card company to set up payment plans, which they were happy to do, better than nothing.  When I couldn't meet those,  the letters started coming.  The only card still active was my American Express, used to purchase merchandise for the half-empty shop, and everything else.  Month after month, come hell or high water, the Amex bill was top priority; we couldn't afford to lose that.

I learned of a free local agency which could help consolidate my bills, and at my appointment explained I'd already set up payment plans with each company myself.

"I'm hoping to keep my name from becoming total mud."

The fellow looked at the screen then looked at me.

"It already is, isn't it?"

Yup.  My only option was Ch. 7 bankruptcy.  I was in shock, the shame...

Everything was in my name, debt-wise, and I felt I was drowning. Cap tried to be supportive, but all I could focus on was how quickly I went from a stellar credit rating to destitution.  My depression and resentment were growing, which didn't make for the best life-partner.

I went alone to Bankruptcy court in Old San Juan just after Thanksgiving, 2002.  I told the judge about the $9,000, already offered to the IRS but which they hadn't yet accepted.

"It's yours, it's theirs, it's somebody's, not mine."

"Keep it - you're going to need it for the IRS.  Bankruptcy granted!"

That was a big relief, you can imagine; but I was still waiting to hear from the IRS.  Less than a month later, the last mail-day before Christmas, I received a letter from the IRS:

(sic) "You are absolved of all debt. (Keep your IRA.)  But if, during the next 10 years, your situation dramatically improves (the lottery), we can still come after you.  Have a nice life."

The Governor called

Believe you me, I couldn't believe my eyes any more than you can now, but I still have both letters, in case I ever need proof.

So the moral of MY story is not to assume the worst when it comes to the IRS.  If you're in trouble, make an appointment with your local IRS office and talk to someone.  It may take some time (since their budget for additional agents was subsequently cut by those fearing the agency was becoming weaponized), but have patience.  They're people, like us, with one of those jobs people LOVE to hate.

To save everyone time, the IRS has begun Direct File, a free pilot-filing system on their website.  It's currently limited to residents of AZ, CA, FL, MA, NH,, NY, SD, TX, TN, WA, WY but they expect to expand it to the rest of us shortly. Not sure of the rules, but you can do it on your phone, a plus nowadays. Since I'm in Oregon, I'm heading for IRS Free File.  

So don't be afraid to face the music.  There's no Debtor's Prison anymore.