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Private eye seeks help from Whistleblower to solve the mystery of the $1 tax refund

Posted on July 20th, 2009 – 12:28 PM
By Lora Pabst

Richard Lind runs a private detective business in Champlin, so it’s safe to say he deals with his fair share of mysteries. This June, he stumbled into his own caper, one that left him with a $1 check from the IRS and a lot of questions about the efficiency of government.

Lind received a letter from the IRS in June saying that he had missed his quarterly tax payment and he was going to be charged a penalty and interest. He was surprised because he has the money withdrawn electronically from his checking account. A quick phone call to the IRS cleared up the confusion - the payment had been made but the letter was sent before the IRS received it. In fact, the letter had been sent before the payment was due, which bothered Lind.

“I don’t think you should get a demand letter from the IRS that’s generated prior to the time the payment is due,” he said.

So the IRS sent him a second letter, confirming that the agency had made a mistake. Two weeks later, Lind got a third letter from the IRS. He had overpaid his taxes - by $1. The next day, he got the check itself, for one U.S. dollar, drawn on the U.S. Treasury.

At that point, he contacted Whistleblower to see if I could track down why the government spent so much time and effort to send him a check for $1.

“In the scheme of things, this is not a big deal,” he wrote in an email. “However, if my situation is repeated many times over, it is a waste of time and resources on the part of the IRS.”

That’s an issue that Whistleblower cares deeply about. So I contacted the IRS.

Dan Boone, a spokesperson for the IRS, said there didn’t appear to be a large scale problem with notices being sent before payments were due. He said Lind’s situation sounded like an isolated incident.

“It is unusual for a person to get a notice for a payment prior to the due date,” he said.

As for the $1 check, that’s the IRS threshold, programmed in its computers, for spitting out a refund check. Boone pointed out that on the tax return form, there is a box to check if the tax payer wants a refund sent or if they want the amount applied to the next quarter. Lind said he didn’t notice the box and he thinks a lot of other business owners might not have known about it. But he’ll check the box from now on, for the next time he gets a refund of $1 or more.

This entry was posted on Monday, July 20th, 2009 at 12:28 pm and is filed under Government spends your money. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

11 Responses to “Private eye seeks help from Whistleblower to solve the mystery of the $1 tax refund”

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  1. savvyspy Says:
    July 20th, 2009 at 4:04 pm

    At that point Mr Lind should have asked himself why he has so much spare time on his hands for such meaningless pursuits.

  2. FormerBusinessOwner Says:
    July 20th, 2009 at 4:19 pm

    To claim it as “unusual” for a demand letter to come out before a due date is clearly an uninformed comment. I remember panic nearly setting in the first time I received such a letter from the IRS, and it was, indeed, before the due date.

    It has been many years now, and I haven’t run that business since the end of the last century (I just had to state it that way), or I might remember more details. It seemed to be a fairly common occurrence, and I remember learning to ignore the early demand letters (after a number of instances and many phone calls).

  3. cpatl Says:
    July 20th, 2009 at 5:00 pm

    In many cases, it is more efficient for a business (or the government) to treat a tiny transaction like this the same as they would treat a large transaction. You’d spend more time and money trying to remove the little transactions from the books than to just let them go on as usual. There are bigger fish to fry, Mr. Whistleblower. Go find them.

  4. Island Despot Says:
    July 20th, 2009 at 5:21 pm

    Cpati…WOW! You used the phrase “more efficient”
    and government in the same sentence. WOW again!
    Also, you either missed the entire point of the situation
    or you work for the IRS. lol

  5. Plexi Says:
    July 20th, 2009 at 5:56 pm

    Why is this a whistleblower story?? The IRS owed
    him $1, and paid him $1.. If it didn’t pay him, you’d
    have run the story about the IRS pocketing the $1.

  6. Barry Says:
    July 20th, 2009 at 6:06 pm

    Sorry, Jim, but WHO CARES!

  7. Much ado Says:
    July 20th, 2009 at 6:19 pm

    cpati has the right of it…it’s much easier to automatically process transactions rather than to deal in exceptions…why would they bother to treat the $1 any differently…that would require human oversight and interaction. Now, if Congress passed a law allowing them to just hang onto it and have the person put it on their next year’s return, that’d be ok…similarly to the way a mortgage servicer can keep up to $50 of surplus in their account rather than cut you a check…in that case, the IRS’s software could be modified accordingly…and still not require human interaction.

  8. Chris Says:
    July 20th, 2009 at 8:53 pm

    This is perfect evidence of the efficiencies of government. This sounds like the sound practices of Medicare. I know let’s allow the government to control more business. If we scale this $1 to Healthcare it should only cost us a few hundred…. million!

  9. Carly Says:
    July 20th, 2009 at 10:10 pm

    I also got a $1 check from the IRS and had no idea why. I thought it was so ridiculous that the Feds spent the money to send me a $1 check that I returned it and suggested that they apply it to the national debt. In response, I got 6 pages of forms to fill out saying what I wanted them to do with the money. I have not returned the forms!

  10. Bebop Says:
    July 21st, 2009 at 11:27 am

    My wife once got a 34 cent check from a large Twin Cities company because we had overpaid a bill. We questioned the efficiency of this and the cost, since it cost more than 34 cents to send the check. For those who think the business model is so efficient and effective, think again.

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