Many tax notices are wrong

By David Compton / guest columnist

October 06, 2007 11:24 pm

— The first week of October was unusual this year. The Mississippi State Tax Commission mailed additional assessment and non-payment notices to thousands of Mississippians. The Director of Communications has not returned my phone call requesting an official response. I would like to have included an official statement and statistics.
The Commission mailed out as many as 80,000 notices dated Sept. 26 and 27. The majority of the notices we have seen were delivered to our zip codes by U.S. Postal service on Tuesday and Wednesday the following week. Taxpayer frustrations were high as the wording in most of the notices was confusing and some taxpayers understood a response was required within ten days. A first class letter leaving Jackson and arriving in Meridian and Philadelphia seven days later is not uncommon. After believing 7 of their allotted 10 days were gone, most people tried to call the Tax Commission or their accountant. The Tax Commission was overwhelmed with calls and the switchboard was simply taking messages for calls to be returned the following day. The combined bureaucracy of state government and the U.S. Post Office and the inability to speak to a person increased individual aggravation and discontent. Many contacted their accountant.
Accountants are winding down the last days of a historical year. Never before have we experienced three tax year deadlines within a 365 day period. Due to Hurricane Katrina postponements the 2004 year tax returns were due October 16, 2006 and 2005 year tax returns were due April 17, 2007. The 2006 tax return extended due date is October 15, 2007. I have not spoken with any accounting firms who did not have uncompleted 2005 returns on the first day of the year. Generally, the larger the firm the greater the number.
Accountants do not have a private telephone number to deal with the State Tax Commission like we have with the Internal Revenue Service. We received the same busy signal or were offered to leave our name and number with the switchboard when we called the Tax Commission. The call volume at the Tax Commission on Friday, Sept. 28, 2007 was over 5,000 calls. Only one of the notices we have seen was delivered in Meridian before Tuesday so one might assume those Friday calls came from the Jackson area.
Our office has handled many of the notices from both our clients and some individuals who prepared their own returns. Nine percent of the notices were correct because the taxpayers had not paid the balance on their tax returns. Of the remaining 91 percent, 17 percent owed an amount less than the notice amount. The remaining 74 percent owed nothing at all! If these numbers are representative of all the notices we can estimate 59,000 notices were sent out totally wrong.
Though the timing is bad for accountants and the anxiety is high for the taxpayers, what about the other groups affected? If you believe the U.S. Postal Service cares enough to improve first class postage delivery times from the capital city to Meridian to less than five days you are mistaken. It is not that the USPS does not care; it is that consistent service has not improved. Many good people work for the USPS and share this concern but are powerless to affect change.
It would be easy to point a finger at the Tax Commission and leave it at that. This would be unfair and I will not do this. The whole picture is better than the part we are seeing now. The Tax Commission upgraded their computers this year and this is the first round on notices being mailed from the new system. Many employees have worked long hours to make this transition work. Did they fail? That can be decided later in a review. What the Tax Commission has done is to gain a more powerful software application that can make administration of the tax collection function much better. It is rare that a changing of a system does not create problems. All businesses have experienced this to some degree.
I would like you to remember two things from this article. First, the person you will talk with at the Tax Commission was not “the individual” who singled you out and sent you this letter. They are doing their job. They are somebody’s father, mother, son, daughter, husband or wife. They go to church or the bar, or maybe both, just like you do. Please be respectful when dealing with them. If you cannot get your problem resolved, then see a professional.
The second thought is about your notice. I talk with many people each year who pay these tax notices because they do not want to raise any suspicion with the government or they assume the government is right and they are wrong. Sometimes it is the amount. Your time is worth more to you than you care to spend getting it corrected. The reasoning of the amount involved I can accept. But take notice. If you received a notice you more than likely do not owe the money. Verify the accuracy of the governments claim. The IRS sends out erroneous bills as well but I have never seen their error ratio to be this high.

David Compton is a Certified Public Accountant with offices in Meridian and Birmingham, Ala.