Oh don't worry. When you get an audit notice you get assigned an agent dedicated to your case. You can talk to them easily. They will talk to you all the time. It's amazing. The question and answer flow is just non ending.
I got an audit notice once. The agent never answered his phone or my voicemails. Ended up having to actually drive down to the Federal Building and hunt down his cubicle on the deadline date.
That said, the process was pretty smooth, and since I wasn't trying to pull any tax shenanigans, not all that upsetting. There are any number of corporations whose customer service is far worse than the IRS's.
I made an error on my tax form one year causing the IRS to say I owed a whole year of taxes, and I was able to resolve it amicably even after they realized they weren’t going to be getting any money from me. When you are in accounts payable, the service does get better.
I’m in one of those now again because we forgot to file the 1099s for the RSUs sold to satisfy my wife’s ordinary income tax on RSU grants. Of course, since it was sold to pay ordinary income tax the cost basis adjusts all the way up, they haven’t gotten back to me yet.
Every interaction with the IRS I’ve had has been top notch, if sometimes excruciatingly slow.
That includes the “you forgot cost basis in day trading so you made fifty million dollars” letter a friend got, to the “you are an idiot and filed wrong, here’s the few grand we owe you unless you really want to contest” because of forgetting withholding.
I had to do this years ago when someone registered my email address on an online dating service, I kept getting spam from it. I sent support requests, messages, help tickets, asking for them to remove my address or change it - no response.
Used the "forgot password" link, logged in, posted porn. Account deleted in about 5 minutes.
Did the site not have a way to delete the account once you logged in, or did you not feel like spending time looking for it given that you had already had your time wasted by them?
But I do worry ... that I may not get an audit notice. I thought that as an American, I was entitled to one, since people go one about this all the time. In 35 years, I've never received one.
Oh wait ... the audit rate is 0.38%
Oh and wait again ..
> Of the more than 164 million individual income tax returns filed with the IRS last year, only 626,204 were audited—down from 659,003 during fiscal year 2021. Of those 626,204 audits, 93,595 were regular audits while the remainder (532,609) were correspondence audits, which are usually done for simple mistakes on a tax return and can be easily corrected through mail correspondence with the IRS.
The IRS gained this reputation in the 1980’s when audits were much more common and likely to happen to middle class people.
It may have been warranted, though, because Congress passed a law that required people to provide a social security number for the dependents claimed on the return. Before that, you could just claim you had a dependent without providing proof. And, lots of people did just that.
Also in the 1980's, corporate customer service was still staffed by reasonably competent and empowered employees. So having that for comparison, the government failure modes of incompetence getting entrenched plus layered bureaucracy looked quite poor.
Now the corporate fashions have gotten rid of all the competent reps, through underpay and disciplining anybody that speaks up. And corporations have developed even more bureaucratic diffusion of responsibility than government! Add in the cherry on top of offshoring (heavy accent plus lowest-bidder voip jitter), corporate customer service has become generally terrible.
So with that backdrop, one expects that calling the government will be even worse. But what you actually find are reps that have the bandwidth to actually understand at least some of what they're talking about, as they haven't been squeezed like the corporate world has.
A dependent saves you a rather small amount of tax. By my understanding, audits are focused primarily on failure to report actual income, or claiming outsized business expense.
Like many FAANG employees, the IRS calculates my withholding incorrectly. I got a letter in January announcing that I didn't withhold enough and applying a penalty.
I spent two hours on the phone on a Friday being bounced around the IRS. Talked to plenty of people, but each one thought I was someone else's problem. I tried again on that Monday: waited on the phone for two full hours before being unceremoniously hung up on by their automated system.
FWIW, it seems there's the luck of the draw on three distinct systems (robot + touch dial menu + human operator, robot + voice menu + human operator, or just robot + voice menu). They're incompatibly dysfunctional. The first one is when I got bounced around. The second one, the operator hung up on me because she couldn't hear callers routed through that system. The last one was where I spent 2 hours without a human before being dropped.
Calling the IRS was even more of a pain in the ass than I anticipated. I gave up and paid the penalty. (And that was in January!)
> Like many FAANG employees, the IRS calculates my withholding incorrectly. I got a letter in January announcing that I didn't withhold enough and applying a penalty.
The IRS doesn’t calculate withholding. They provide rules and default formulas to employers and payroll providers, but you can and should adjust the withholding as necessary by filing Form W-4 with your employer’s payroll department. If you can’t get enough tax withheld to avoid a penalty for whatever reason, you also have the option of paying estimated taxes four times a year directly to the IRS - but usually this is only needed for cases like freelancers where there isn’t enough withholding to pay the required tax. Normally estimated taxes would be four equal payments with specific due dates, though unequal payments can also be made.
How much do you need to have paid through withholding plus estimated taxes avoid a penalty? At least 90% of the current year’s total tax liability, or all but $1000 of that amount, or at least 100% or 110% (depending on your income) of the same amount for the previous year, whichever is lowest. The IRS has publications which discuss this. If you make unequal estimated tax payments, there are special calculations to avoid a penalty based on when in the year you get how much income.
So, if you use the formula based on your previous year’s tax liability, and don’t make unequal estimated tax payments, you’ll never have to guess and will never owe a penalty.
You join a company as an employee and fill out a form that says "I'm single with no dependents" and then they figure the withholding.
That algorithm is broken - it doesn't withhold the required amount for many people at RSU-granting jobs.
It's insane that the system is designed for most people to be FTEs and have their taxes withheld, but the provided formula doesn't withhold the required amount and they act like that's your fault.
I understand that you mean to be helpful, but the IRS is indefensible.
>That algorithm is broken - it doesn't withhold the required amount for many people
This has been an issue historically, but spiked bigly after the 2017 Republican Tax plan. They perm lowered the corp tax rate from 35% down to 21%, perm lowered taxes overall for the wealthy.
The middle class and lower end, had their DEDUCTIONS lowered, but the taxes owed didn't change. This caused it to appear that they got a lowered tax rate, then everyone got hit with owing all of that "largess" in 2018.
TL;DR: Republican fuckery made it much worse, but it's always been a thing.
> You join a company as an employee and fill out a form that says "I'm single with no dependents" and then they figure the withholding.
That's not all the form says, though, unless the employer is offering you a very simplified version in their onboarding system which is not something they're allowed to insist on. (They can make a substitute W-4, but they still need to provide the various IRS instructions and worksheets, and you still need to be able to adjust your withholding adequately.)
Step 4 of the form lets you adjust things however you need. Additionally, the first page of the instructions encourages you to use a more precise estimator at www.irs.gov/W4App if you, among other circumstances, have capital gains or bonuses - RSUs fall within that scope.
For situations too complex for the online estimator (which sometimes absolutely can arise for FAANG employees), both the estimator landing page and the W-4 instructions point you to the worksheets in Publication 505. But you don't have to go to that extreme if you just use the solution just below based on the previous year's total tax liability.
> That algorithm is broken - it doesn't withhold the required amount for many people at RSU-granting jobs.
Agreed, unfortunately. At least, you can just make sure your total withholding for the year is at least 110% of your previous year's tax liability (I'm going to assume you're too high-income to use the 100% level), and then you don't have to care if it withholds the right amount since it will still be enough to avoid a penalty.
> It's insane that the system is designed for most people to be FTEs and have their taxes withheld, but the provided formula doesn't withhold the required amount and they act like that's your fault.
For FTEs with simple situations like just salary or wage income at a single job throughout the year and not much other income, it does a pretty good job.
For more complicated personal situations, most tax systems worldwide need the taxpayer to do more calculations and/or sometimes advance payments to get the right contributions and forms to the right accounts and offices at the right times of year. The US system is less unique in this regard than you might think. And yes, a FAANG employee with RSUs is a more complicated personal situation - I know this firsthand, having been one myself in the past.
> I understand that you mean to be helpful, but the IRS is indefensible.
I agree that the US tax system is far too complicated, but it's a harmful political trope for the blame to be directed at the IRS when almost all of the responsibility for the complexity lies with Congress. Politicians and propagandist think tanks love to popularize that incorrect framing.
The IRS can't do anything with most of the complaints directed at it, since they're mostly just implementing the statutes enacted by the politicians in Congress. (A few of the details are decided by policymakers at Treasury/IRS in regulations and other administrative policies like revenue procedures, but these are just filling in the details on what the politicians legislated.)
At the same time, the politicians who actually legislate most of these rules manage to escape blame from their voters, because everyone pretends that the IRS is to blame for what Congress actually decides. So the politicians are free to listen to the lobbyists who will actually decide their donations based on whether the politicians obey them, instead of their voters who won't correctly hold them accountable at the ballot box on this issue.
The coup-de-grace is that those politicians who serve the wealthy ruling class get political support to defund the IRS based on how much people incorrectly hate the IRS for what Congress has legislated, rather than anything about what's appropriate for the IRS's actual duties.
This has two big consequences: One, the wealthy ruling class can get away with a lot of shady tax shenanigans, because the IRS can no longer afford to audit them and then fight them in court all the way to conclusion, whereas the wealthy taxpayers can afford more legal firepower than the IRS. And two, exactly because of this inability to properly audit major tax scofflaws, the government actually gets less tax revenues when the IRS receives less funding.
So cutting the IRS budget due to politically misdirected blame forces budget reductions to a lot of other services on which the population relies, and yields far weaker governmental oversight of the ruling class who can get away with increasing amounts of misbehavior.
IRS doesn’t calculate your withholding, you (and your employer) do. If you end up owing money at the end of the year, you probably failed to properly update your W4. For example, my employer only withholds 22% on RSU grants. It’s my responsibility to update my W4 to withhold extra from my regular pay to compensate, or make estimated quarterly tax payments.
I got audited once. They had my old address, and I was very worried it would appear I was avoiding them. I kept calling my agent and leaving messages- but I never got a hold of anyone. I reached out to a CPA who said I should fax the agent instead. I got a response after that! This was only 10 years ago- so don’t underestimate the power of a fax when dealing with the IRS!
I have never called IRS before, but I can imagine how horrible that can be. I called banks before, It may take 50 minutes for someone to pick up the phone.
I don't understand why they think live phone call serves customers better, whereas I think email is a much better option and they seem to remove this option.
I had to call them over a routine matter (address change) a couple months ago and it wasn't so bad apart from the odd phone tree referenced in this post.
The waiting time was about what you mentioned, but there was a convenient option to leave a call back number so you don't have to wait on hold.
I made a total of 3 calls, each spaced a few days apart. The first two agents were markedly impatient and eager to get me off the phone for some reason. The third one was very friendly and helpful and finally resolved the issue.
Same experience here as other repliers. I've had to call the IRS a small number of times and each time I called, I got an english-fluent human who was surprisingly helpful and straightforward. It was definitely unexpected.
I called the IRS some time pre-2019, after they misinterpreted my $500 taxable income as $500,000. (I had to file for other reasons.) I got an agent quickly and he was helpful and resolved the problem.
I had to do some kind of identity verification a couple of years ago. I tried a couple of times and didn't get through and then mistakenly called like an hour before I was supposed to be able to and got right in.
Honestly the one time I had to call I got an agent who spoke clear english and was able to tell me exactly what forms to download and exactly what to write on them to clear up the matter. I was stunned and frankly pretty surprised.
As the other replies are mentioning, the IRS actually bucks the trend. Historically at least they are very well funded, and investment in this kind of customer service literally pays off as they help taxpayers get their tax in correctly. You can call the 800 number and actually get an agent on the other end who knows the system and is empowered to help you out.
I haven't had to call in for an agent post-Trump though, so things could have changed. (Not meant as a political statement; it's a simple fact that Trump utterly destroyed their funding for a few years.)
This technique can also be used to protect your copyright.
A Taiwanese YouTuber was annoyed because somebody always pirate his content to China mainland sites like bilibili. He complained to bilibili but no response.
So, he intentionally put a small Winnie-the-Pooh in the corner of the video, only on 1-2 frames. Then his contents got deleted immediately.
It would be nice to have an overlay on your phone that displays the options of what you can press. I’ve always wanted to skip having to listen to the recorded message drone on and on before mentioning which number to press for something.
That's not sufficient though, IME they rarely accept numbers until they've at least started giving options. E.g. I know the option I want because I'm calling back after it dropped or the next day or whatever; have to listen to the options again even though I know my answer.
A few years ago when I had to call the Canada Revenue Agency, I got a human immediately. No machine. Just a hello/bonjour and then asking for my info and solving my problem. It was quite shocking given the stereotype that tax agencies suuuuuuuck.
