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Movie Depicts Lopsided View of IRS

I recently watched the documentary “Death or Taxes: The Sad Truth About Our American Tax System.”

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The most interesting thing about this film, to me, was in the credits at the end. Filmmaker Roni Deutch includes a list of people at the Internal Revenue Service and the U.S. Treasury who refused to be interviewed for the film. That includes the current IRS Commissioner, Secretary of Treasury, and others. The film focuses on people who have committed suicide or done other dramatic and destructive things when faced with the IRS’s collections division and criminal investigation groups.

Anyone who has ever had a problem with the IRS can more than identify with the anger, helplessness and frustration.

While some of the stories are valid and utterly inexcusable, other cases are 100% the fault of the taxpayer in trouble. This film would have been much more effective if they had only included real victims.

Unfortunately, you can’t sell a film without including sensational names. For instance, Deutch sympathizes with Richard Hatch, the first Survivor millionaire and with Andrew Joseph Stack, III, who crashed into the IRS building – killing people. Including them destroys the credibility and effect of the film.

Looking at Richard Hatch. How did he not realize he had to pay taxes on his million-dollar prize? CBS sent him a 1099-MISC with $1,000,000 in box 3. Yet, Hatch claims the studio told him they would pay it. If that’s really true, Hatch should have filed and paid his tax return; then instantly sued the producers and the studio after getting that 1099. He didn’t have a contract with IRS letting him off from paying the taxes.

Where Hatch destroys his own case regarding tax evasion is by not paying tax on a variety of other income he earned either. He didn’t report income from a radio show, rentals and other sources either. Instead of paying about $475,000, Hatch now owes over $1.7 million dollars.

Then there’s Andrew Joseph Stack, III, a man who spent his life being angry and picking fights. Read his own words.  He made an error on a tax return. Instead of simply paying the bill, or setting up an installment agreement, he turned it into a capital case – ultimately ending in his kamikaze death.

Knowing the details about these two people makes me wonder about some of the others whose stories are represented in the film. What happens if we dig deeper?

Are there nasty people at IRS? No question about it. There really are IRS examiners and collections officers who should be stripped of power and fired – or even prosecuted.

Are you helpless in the face of such horrendous, relentless folks? Absolutely not. You can turn them in to IRS, TIGTA, the Taxpayers Advocate Service, your Senator or Congressperson – or even the press. You don’t need to worry about retaliation from IRS. You really don’t need to put up with being terrorized by IRS – or any government employee.

In fact, despite having faced some utterly inexcusable behavior from some IRS staff, I have also seen IRS staff go out of their way to help taxpayers in trouble.

One collections official looked at a taxpayer’s tax assessment of over $300,000 and didn’t believe it was correct. She helped that man’s tax professional review the records and find about two-thirds of the errors in the original audit. Then, arranged to get an audit reconsideration, where the rest of the balance due was eliminated.

In another case, an IRS Revenue Officer tried to help a divorced woman get off the hook for joint tax debt generated by her CPA ex-husband. IRS had been grabbing her refund, garnishing her wages, getting her fired from jobs for years. This IRS employee did her best to get this woman innocent spouse status to stop the collections efforts.

I could tell you more stories about heroes at the IRS than Deutch can produce about monsters. But, I am not trying to sell expensive representation services to you.  This film is designed to put the fear of IRS into prospective clients. It will certainly convince taxpayers they need to pay a tax professional to represent them.

If you like horror stories, watch it. It won a bunch of awards. Roni Deutch sounds terrific narrating the film!

Readers, what would you do if you owed IRS money?

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Eva Rosenberg, EA, is the publisher of TaxMama.com, where your tax questions are answered. Eva is the author of several books and e-books, including the newest edition of “Small Business Taxes Made Easy,” now available at your favorite bookseller. Eva teaches a tax-pro course at IRSExams.com.

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  • The Tax Blog brings together a team of award-winning tax journalists from the Dow Jones network and around the web to examine the tax issues, changes and legislation that affect families, investors and small business owners. Our contributors include Tax Report columnist Laura Saunders (WSJ), Tax Guy columnist Bill Bischoff and senior reporter Jilian Mincer (SmartMoney.com), retirement-focused reporter Anne Tergesen (WSJ), wealth management writer Arden Dale (Dow Jones Newswires), TaxWatch columnist Eva Rosenberg and personal finance reporter Andrea Coombes (MarketWatch), and reporter Alyssa Abkowitz (SmartMoney). They’ll provide the latest news and insight, mine the tax code for tips and loopholes, and answer your questions about tricky tax situations. Contact the The Tax Blog with ideas, suggestions or tax questions at thetaxblog@dowjones.com.

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