Ford get shafted by the IRS

Jstas

http://www.freep.com/article/20100604/BUSINESS01/100604049/1210/business01/Ford-loses-445M-case-against-IRS

http://www.autoblog.com/2010/06/09/report-ford-loses-445m-judgment-against-irs/

From Autoblog:

Toward the end of the last millennium, Ford thought it might owe the IRS some money for possibly underpaying taxes between 1983 and 1994. To convince the IRS to halt the accrual of interest on any amount Ford might have underpaid, Ford gave the IRS a lump sum of cash.

However, turns out that Ford had overpaid its taxes, so the IRS had to return the lump sum of cash that Ford used to halt the interest. The IRS did so. But while the IRS held onto Ford's money, that money had gained $445 million in interest in the IRS account. When the IRS didn't pay Ford the interest, Ford sued to get it... and Ford lost. A U.S. district judge declared that the extra amount is not subject to refund. Not that it will make you feel any better, but now you know that it's not just the little guy who gets caught up in the arcanum of the U.S. tax code.

Way to go Uncle Sam! Make someone else pay for your screw up!

Guess ya gotta pay off that national debt some how!

And for more news on your tax dollars at work:

From Autoblog:

Report: Top GM execs awarded millions in stock ahead of IPO

by Jeremy Korzeniewski (RSS feed) on Jun 8th 2010 at 6:28PM
It pays to be an executive for General Motors. Actually, scratch that... it will soon pay to be an executive with General Motors, assuming that the automaker's upcoming Initial Public Offering takes place according to plan. According to our friends at TheDetroitBureau.com, a dozen top officials at the company could be looking at a payday totaling as much as $13 million or more, depending on the value of GM stock after the IPO.

According to filings submitted to the Securities and Exchange Commission, Chairman and CEO Ed Whitacre, Vice Chairman Tom Stephens, Chief Financial Officer Chris Liddell, Vice Chairman Chris Girsky and North American President Mark Reuss are all slated to get major stock deals.

After GM received its $50 billion bailout from the U.S. government, Kenneth Feinberg, Treasury's special master on pay, set up pay restrictions for officials at the automaker that capped salaries at specified levels, oftentimes to no more than $500,000 per year. Naturally, the stock deals awarded to the aforementioned executives after the company's expected IPO should more than help make up for any perceived monetary deficiencies.

http://www.autoblog.com/2010/06/08/report-top-gm-execs-awarded-millions-in-stock-ahead-of-ipo/

http://www.thedetroitbureau.com/2010/06/top-gm-execs-awarded-millions-in-stock/

Better yet, Uncle Sam, give copious amounts of rewards to those who screwed up as well!

exalted512

I love the governments do as we say, not as we do attitude.

"Hey, if you dont pay us enough, you owe us that plus interest on that amount...but if you pay us too much, we dont have to give you any interest that you would have earned"

BS...but at the same time, is it not Ford's accounting dept. responsibility to know how much to pay on taxes?

I know its not like turbotax, but damn overpaying that much? $445 million in interest has to mean that overpaid by billions...right?
-Cody

danger boy

lets see how long it takes this thread to be closed up?

dkg999

Wait a minute, that's a Ford bean-counter screw up, not an IRS screw up! Ford didn't figure out what they actually owed and made a guess. The IRS shouldn't pay them any interest. Ford needed better bean-counters and attorneys! Let's just hope that interest made by the government went to pay down the national debt.

bobman1235

Isn't this just a macrocosm of something most of us deal wtih every day? If you've ever gotten a tax return, that's technically money the IRS took from you that they weren't supposed to, and held for up to 12 months. You think the IRS didn't make any interest off of all that?

tonyb

danger boy wrote: »

lets see how long it takes this thread to be closed up?

Probably not long. You have to admit though,with government stretching it's money grubbing hands into so many area's of our society,it gets hard not to bring some sort of politics into it. I thought John would have posted the story on the tax being proposed to be put on all electronics. Regardless, I always fall back to the saying, " A government big enough to do everything for you,is big enough to do anything to you." Of coarse,assuming most give a darn,otherwise this means naught.

Face

bobman1235 wrote: »

Isn't this just a macrocosm of something most of us deal wtih every day? If you've ever gotten a tax return, that's technically money the IRS took from you that they weren't supposed to, and held for up to 12 months. You think the IRS didn't make any interest off of all that?

If you claimed the correct amount of deductions, then you shouldn't be receiving a return. I claim a much higher number throughout the year, but then use the correct number when filing. My return is much smaller and I receive more money throughout the year.

IIRC, if they delay your return past 3 months, you accrue interest up to a certain percentage.

bobman1235

Face wrote: »

If you claimed the correct amount of deductions, then you shouldn't be receiving a return. I claim a much higher number throughout the year, but then use the correct number when filing. My return is much smaller and I receive more money throughout the year.

If you claim the "correct" amount of deductions, you DO receive a refund, because the system is set up that way. That's why a single guy like myself has to claim like, 7 for it to even out at the end of the year. Most people wouldn't even think to do this, and I'm sure that's by design.

Roy Munson

So Ford made bad cars for decades and has incompetent accountants..so what's new. :eek:

shawn474

Roy Munson wrote: »

So Ford made bad cars for decades and has incompetent accountants..so what's new. :eek:

HAHAHAHAHA........i do commend them though and feel as though they should be praised somehow for not taking the government bailout extended to other auto manufacturers.

hearingimpared

Not taking sides on this one but I have felt the shaft of the IRS without a kiss.

I'll sum it up real quick. You owe them money. The don't find out for 20 years. They come after you and you have to pay them the original money, fines and interest.

They owe you money. You don't file a return for three years, their response, "tough luck Joe, you have three years to file a return or else we keep your money!" That's a true story.

tonyb

hearingimpared wrote: »

Not taking sides on this one but I have felt the shaft of the IRS without a kiss.

I'll sum it up real quick. You owe them money. The don't find out for 20 years. They come after you and you have to pay them the original money, fines and interest.

They owe you money. You don't file a return for three years, their response, "tough luck Joe, you have three years to file a return or else we keep your money!" That's a true story.

Can you now see why they want to get rid of guns ?:)

LessisNevermore

tonyb wrote: »

Can you now see why they want to get rid of guns ?:)

Can you now see why threads get closed?:p

tonyb

LessisNevermore wrote: »

Can you now see why threads get closed?:p

Kinda why you can't say "bomb" on an airplane.

JohnLocke88

bobman1235 wrote: »

Isn't this just a macrocosm of something most of us deal wtih every day? If you've ever gotten a tax return, that's technically money the IRS took from you that they weren't supposed to, and held for up to 12 months. You think the IRS didn't make any interest off of all that?

Face wrote: »

If you claimed the correct amount of deductions, then you shouldn't be receiving a return.

Argh. Sorry, pet peeve of mine. A tax Return is a document you file on or before April 15th each year. A tax Refund is a check cut to you by the US Treasury if you overpaid your taxes for the year.

hearingimpared wrote: »

Not taking sides on this one but I have felt the shaft of the IRS without a kiss.

I'll sum it up real quick. You owe them money. The don't find out for 20 years. They come after you and you have to pay them the original money, fines and interest.

They owe you money. You don't file a return for three years, their response, "tough luck Joe, you have three years to file a return or else we keep your money!" That's a true story.

Holy crap. What did you do to toll the SOL for 20 years?!?! Did you file your returns on time?

As for Ford, it was there screw up. If you don't want to risk losing interest from overpayment or penalties from underpayment, get better tax lawyers.

bobman1235

If you don't want to require everyone to overpay for tax lawyers, fix the stupid tax code.

tonyb

bobman1235 wrote: »

If you don't want to require everyone to overpay for tax lawyers, fix the stupid tax code.

Why?? It's made that way on purpose, and benefits who? Surely not you and me.

concealer404

Sounds like a Ford accounting problem, combined with IRS greed. But that greed isn't news, so quite simply: Ford should have actually made the effort to KNOW whether or not they owed money, and just avoided the issue.

Ah well. Live and learn.

hearingimpared

JohnLocke88 wrote: »

Holy crap. What did you do to toll the SOL for 20 years?!?! Did you file your returns on time?

That didn't happen to me. I was just giving an example of how the IRS works. As far as my experience with not being paid by the IRS for the overpayment I made, that happend but I take full responsiblility for it. I didn't think I made enough money that year to have to file a return but was told by an accountant that I should do it so it doesn't send up any red flags to IRS to audit my returns. Turns out they owed me $235 and kept it due to their hypocritic three year rule.

After that I filed a return every year until I became disabled and know for a fact in that I spoke to and IRS agent and he assured me that I don't have to file a return.

JohnLocke88

bobman1235 wrote: »

If you don't want to require everyone to overpay for tax lawyers, fix the stupid tax code.

Okay let's make a flat tax, or how about a fair tax? No deduction for mortgage interest, no additional exemptions for dependents... No child tax credit, No 7.5%+ of AGI medical deductions, no property tax deductions, no state sales or income tax deductions, no Foreign Tax Credit, no Additional Child Tax Credit...

I could think of many ways to make the "stupid tax code" simpler, but some people are going to get a raw deal as it's impossible to make drastic, overarching changes to a system without unintended consequences.

I guess by everyone you might have meant corporations. And if so, then I assure you, business interests are more than capable of lobbying for themselves. It's us monkeys that gum up the works for them more often than not, what with our silly notions that corporations should pay taxes and what not.

JohnLocke88

hearingimpared wrote: »

That didn't happen to me. I was just giving an example of how the IRS works. As far as my experience with not being paid by the IRS for the overpayment I made, that happend but I take full responsiblility for it. I didn't think I made enough money that year to have to file a return but was told by an accountant that I should do it so it doesn't send up any red flags to IRS to audit my returns. Turns out they owed me $235 and kept it due to their hypocritic three year rule.

After that I filed a return every year until I became disabled and know for a fact in that I spoke to and IRS agent and he assured me that I don't have to file a return.

Rule 1 of Tax Accounting. ALWAYS FILE A TAX RETURN!

bobman1235

JohnLocke88 wrote: »

Okay let's make a flat tax, or how about a fair tax?

Not everything needs to be taken to the extreme. There's a happy medium between a flat / fair tax and the ridiculous maze of tax laws now. The average person or small company shouldn't need to hire a lawyer every year to figure out what they owe or should be given back.

tonyb

Yet the irony in all this is the ones who write the tax codes,owed back taxes.

Kex

bobman1235 wrote: »

Not everything needs to be taken to the extreme. There's a happy medium between a flat / fair tax and the ridiculous maze of tax laws now. The average person or small company shouldn't need to hire a lawyer every year to figure out what they owe or should be given back.

+1

I had a slightly more positive experience with the IRS. Don't laugh (or cry) but it's true:

1) They owed us a refund one year, not so many moons ago, but didn't pay it immediately.
2) Then they asked us for some information. We answered, and they decided we owed more taxes (since they misinterpreted the information) and wanted us to pay, with a penalty added.
3) We responded again. They reviewed the case, and still told us to pay.
4) We replied again with more precision as to what they were doing wrong.

This took over a year IIRC, because of all the back and forth, but in the end, they refunded every single penny, and since it was their error, they even added interest at a fairly reasonable rate (which we had to declare as income the next year, of course!).

JohnLocke88

bobman1235 wrote: »

Not everything needs to be taken to the extreme. There's a happy medium between a flat / fair tax and the ridiculous maze of tax laws now. The average person or small company shouldn't need to hire a lawyer every year to figure out what they owe or should be given back.

Well, then what would you change, specifically? Pick a Section of the IRC and we'll discuss it.

bobman1235

Specifically? I'm not going to pretend to know enough about tax law to even begin to answer that question. Are you a tax lawyer, or an accountant? Aside from those two occupations, or if you're one of those people who's rich enough to exploit all of the loopholes in the tax code, I Can't imagine anyone defending a 17,000 page document (the length of the US tax code) unless they were profiting from it.

JohnLocke88

bobman1235 wrote: »

Specifically? I'm not going to pretend to know enough about tax law to even begin to answer that question. Are you a tax lawyer, or an accountant? Aside from those two occupations, or if you're one of those people who's rich enough to exploit all of the loopholes in the tax code, I Can't imagine anyone defending a 17,000 page document (the length of the US tax code) unless they were profiting from it.

I'm neither. But if you're not benefiting from some aspect of the tax code, you must either a) have zero income, or b) not have a pulse. Everyone has something to gain from understanding basic tax law. There is a wealth of information online, on the IRS website and other mostly credible sources. You don't have to be "rich enough," to benefit from systematic tax credits and exemptions.

The point I was simply trying to make was that people are so quick to go "Ooooh evil IRS! Oooooh big business out to get you!" Or some combination of the two. The tax code is not perfect, but the people yammering to fix it (often times, read: scrap it altogether) often HAVE NO VIABLE ALTERNATIVE.

Question: Is the tax code "too complicated?"
Answer: Yes.
Question: How do you suggest we "fix it?"
Answer: (Crickets chirping.)

JohnLocke88

BlueFox wrote: »

I believe there is a time limit on getting caught by the IRS of 10 years, which is bad enough.

"The statute of limitations limits the time during which an action can be brought by the IRS for an audit and the time for IRS tax collection activities. Generally, there is a 3-year statute of limitations for the IRS auditing a tax return and a 10-year statute of limitations for the IRS collecting tax."

http://www.wwwebtax.com/audits/statute_of_limitations.htm

Yep, and if no return is filed, and tax is assessed, SOL is generally non existent.

ohskigod

While I do not work for the IRS, I do work for a State tax agency. From that aspect I agree with the decision the Judge made against Ford. Fact of the matter is for whatever reason, Ford a) majorly miscalculated their tax obligation across the board and apparently did not file a tax return for it for quite sometime.

I'm pretty sure that money submitted to the IRS for any reason without a tax return does not accrue interest for any reason. you file the return, if statutorily you are entitled to a refund, you get it. Interest? only if they unreasonably delay your refund through a fault of the own.


Joe, that three year rule is a ****

hearingimpared

JohnLocke88 wrote: »

Rule 1 of Tax Accounting. ALWAYS FILE A TAX RETURN!

If, in fact, a tax return is not required by the IRS, why file one?

hearingimpared

BlueFox wrote: »

I believe there is a time limit on getting caught by the IRS of 10 years, which is bad enough.

"The statute of limitations limits the time during which an action can be brought by the IRS for an audit and the time for IRS tax collection activities. Generally, there is a 3-year statute of limitations for the IRS auditing a tax return and a 10-year statute of limitations for the IRS collecting tax."

http://www.wwwebtax.com/audits/statute_of_limitations.htm

I thought it was 7 years on the statute of limitations for the IRS collecting taxes but now I see it is 10, either way my example was to show how the IRS can take your money and keep it if not filed for the return within three years. The 20 years I stated was exagerated on purpose but the point still stands.