17 May, 2008

IRS charges 104% interest

Even I was surprised to calculate this.

The Truth:  I have been audited three times in my life since 1963 when I first filed income taxes.
Once I got $20 back, once $4,000+ and this last time I owed $300.  All were honest errors.
Now, as you can see, I am not complaining, especially considering the $4,000 "refund" a few years ago.

This time, there was a $26 interest charge for each month (if paid by May 28th).  The notice was dated 28 April.  Lets do the math:  26 x 12 months = $312 for the year (non compounded);
divided by the principle, $300 yields a whopping 1.04 or 104% for the year. 


Blogger Amy Proctor said...

What? That's outrageous!

But what do you expect?

Blogger Chief RZ said...

Thanks Amy. I'll try to make a visit. I, too was a bit surprised and this coming on the heels of the "investigations" into payday lending who charge about that much also!

Anonymous dave said...

I'm not understanding something here, you were penalized with an additional $312 in interest for 12 months that the IRS didn't even know you were delinquent? Or did you incur a $12 interest fee for 1 month? If it's the latter, then my bank could say they pay 102% interest on savings when actually it's barely 2%. If it's the former, get a lawyer and contest the fact that didn't even know they were short $300 from you for a year. I know the lawyer would cost more than the penalty, but it's the principle that matters.

BTW Cheif, you're now blogrolled at my place, for some reason I missed your blog at SAB.

Blogger Chief RZ said...

dave, thanks for the blogroll. I was found to owe $300. The notice was dated 28April. The charge for the one month was $26, and it had to be paid by 28May or the charge would be another $26 for the next month, etc.

My math is correct. I could scan the sheet, but I'll wait to see if anyone actually questions my truthfulness.

Personally, like I said, I don't mind paying, but in light of all this hot air about payday lenders, I thought this apropos.


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