"Beware the ides of March."
Thus spoke the soothsayer to Caesar, and thus spoke the Internal Revenue Service to me a few weeks back.
Did you ever notice that the IRS loves to send out their notices just before April 15? Not such a subtle reminder of what is to come, and a dire warning to those who might be tempted to stray just a bit over the line when compiling their taxes.
In fact, while our system of income taxation works on the voluntary method, clearly the ominous shadow of the IRS keeps things very much in order, and as my father used to say, "keeps honest people honest."
My IRS letter was in the "We have proposed the following changes" category, one which many receive about this time of year.
Having had my own accounting practice many years ago, and having had numerous bouts with our favorite uncle (Sam), these letters do not generate much fear when I receive them. In fact, in some perverse way, I am generally excited to commence battle with this worthy adversary.
In this case, interestingly, their contention was based on erroneous information, which I was most happy to point out to them.
Several years ago, Modesto Commerce Bank was purchased outright by the Bank of Stockton. Being a founder of the Modesto bank, I continued to bank there, and at the year's end had properly reported the interest income which they indicated I had been paid.
Somehow, the IRS has tangled up the two banks and has charged me with failure to report income from the Stockton bank, a bank with which I have never had a formal relationship.
So I simply sat down, gave them an analysis of my Modesto bank relationship and income and also sent off a rather large batch of bank statements and related items for them to digest.
In fact, due to the way I had rounded off the numbers of my three accounts I had overreported by $2, but I generously offered to forget this overstatement in the spirit of good sportsmanship.
Several lessons need to be learned from this encounter:
First, that receipt of the dreaded letter should not automatically make one shudder and assume the worst.
Second, they are not always right.
Third, if the reader has banking relationships with the above-mentioned banks, you, too, may receive greetings from our beloved IRS. Be forewarned, but not dismayed.
And finally, yes I have completed my 2007 return, a rather dismal event this year, given the state of the California real estate market.
The bleak results of 2007 will not give them much of a target for a future audit or review, should they once again decide to send the dreaded "March greetings" next spring.
But, if they do, I will once again be girded for battle, and facing the enemy with a smile and a sharpened sword (or at least a sharper pencil).
Hagerty is an Oakdale real estate developer active in community nonprofits. E-mail him at firstname.lastname@example.org.