Thursday, April 05, 2007

The IRS is Friendly and Efficient

So, a few weeks ago I received a letter in the mail from the IRS saying I owed them $4,854. Needless to say, I found this alarming. Upon inspection, however,I realized that what had happened was that somehow the IRS took the stock options I had exercised in 2005 (and had already paid taxes on) and decided that the gross of those stock sales was unreported income. In other words, back in 2005 I got a net of somewhere in the neighborhood of $4,000 on the exercise, which I had then paid taxes on, and now the IRS thought that I had $17,000 of unreported income. So I got various documents from my old employer and the broker, filled out some IRS paperwork, wrote a cover letter, put them all in an envelope, and before planning to take them over to the post office, I decided to call up the IRS to make sure I was doing everything by their deadline.

After introductions, the conversation went basically as follows:
Me: I'm wondering if I'm OK on the deadline or if I need to ask for an extension.
IRS lady ("Mrs. Boyington"): First, what was the issue?
Me: I exercised some stock options and I got a letter saying I owed taxes on the gross, not the---
Mrs. Boyington: Stock options? Oh, OK. I can take care of that.
Me: Really? I have the paperwork here that I was going to send in.
Mrs. Boyington: That's not necessary. I can make this go away here on the phone.

So it all got taken care of in about a 3-minute phone conversation. Thanks, IRS!


At Friday, April 6, 2007 at 8:05:00 AM PDT, Anonymous Erich said...

The IRS made this mistake with a lot of people - I know quite a few people who were at Yahoo at the relevant time who got dinged with this. So I think they've got the procedure down pat now.

At Monday, April 9, 2007 at 2:02:00 PM PDT, Blogger Ryan said...

The best way to deal with the IRS is just to talk to them. They've been quite helpful to me even when the reporting mistake was my own.


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