Almost Tax Time

March and April are months that, for me, seem to just blow by the calendar and disappear into the distant past.  Here in Oregon the days are still pretty wet and windy, so it’s too early to go out and sit on the deck or to start  using the BBQ. On the other hand, being this far north allows us to have some nice long days and sunny mornings.

Like most years, I’ll organize my files, toss out all of the old records that are over a year old, and file my tax extension. For the past couple of years, my wife Sharon and I have been living on our Social Security pensions, a small pension I have from AT&T, and our reserves left over from old 401K savings. So I doubt if there will be much in the way of taxes to pay, but we still have to file between now and October. It’s mostly just a pain in the butt.

A few months ago I received a rather intimidating official letter from the California State Franchise Tax Board.  It says something along this line:

“Hey, we know your wife’s condo in Orange County ain’t worth a damn. We know that you owe more on it that you could get for it. We know that the rent on it is way less than the mortgage, property taxes, insurance, and Home Owners Association fees that you have to pay. But hey, we want a tax form from you anyway, because we’ve got nothing better to do than to spend a lot of taxpayer money chasing down out-of-state property owners and making them file tax forms that say that they don’t owe us anything.”

It was no big deal. I still had our tax forms for 2007 and 2008 on my computer, so I run a copy of our 1040 and send it to them with a letter saying, “Hey, we didn’t owe anything so we didn’t file.”

A couple of months later, I get this additional letter from the Franchise Tax Board with a blank 540NR. It says that “you better file or we’ll charge you penalties and interest on the money you don’t owe us.”

Again, no big deal. I had the California tax program on my computer, so I just run off a 540NR automatically along with another copy of our 1040. I include a short note saying hey, if you want me to send you a form that says “we don’t owe you anything, that’s OK with me. Here you are. Please note that the amount of tax owed is $Zero.”

Two weeks later, we get another letter on California state letterhead stating that they have received our tax forms within the time allotted and that their records have been updated to show that we still don’t owe any taxes or penalties. However, it also says that we have to send them a service charge of something around $250 for collections. They’re charging us $250 so that they can collect the zero dollars we owe.

The good news is that with one phone call to the Franchise Tax Boards taxpayer service line, the whole mess was cleared up and the collection fee was waived. The fellow at the other end of the line was very pleasant and very helpful. This is a trait not usually found in government employees, especially those trying to collect money from you.

The bad news is that California’s state budget is so far upside down it is a shame that they waste money and government employee time (not to mention paper and postage) chasing down and trying to collect from taxpayers that don’t owe them a dime. Yeah, I know, I should have filed the form originally. However, as soon as they got the copy of my 1040 and could see that we actually lost several thousands of dollars trying to hold on to  that Orange County property – somebody should have just gone into the computer and killed the collection process right there and cut their losses.

So this year I will go ahead and file another extension – but having learned my lesson, I’ll be sure to send in a 540NR just to keep Governor Arnold and his faithful servants happy and off of our butts – saving Californians several hundred of their tax dollars.

Just for fun, here’s some recent photos of friends and family. Enjoy – we did! [Click on the gallery photos to see full sized versions.]

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