It was every business person’s nightmare.
Arriving at Harv’s Metro Car Wash in midtown Wednesday afternoon were two dark-suited IRS agents demanding payment of delinquent taxes. “They were deadly serious, very aggressive, very condescending,” says Harv’s owner, Aaron Zeff.
The really odd part of this: The letter that was hand-delivered to Zeff’s on-site manager showed the amount of money owed to the feds was … 4 cents.
Inexplicably, penalties and taxes accruing on the debt – stemming from the 2006 tax year – were listed as $202.31, leaving Harv’s with an obligation of $202.35.
Zeff, who also owns local parking lots and is the president of the Midtown Business Association, finds the situation a bit comical.
Now he’s trying to figure out how penalties and interest could climb so high on such a small debt. He says he’s never been told he owes any taxes or that he’s ever incurred any late-payment penalties in the four years he’s owned Harv’s.
“It’s hilarious,” he says, “that two people hopped in a car and came down here for just 4 cents. I think (the IRS) may have a problem with priorities.”
Like most people who don’t traffic in IRS notices on a daily basis, Mr. Shallit is, quite understandably, confused by the IRS’s collection notice.
The fact that the tax portion of the outstanding debt shown on the IRS notice is only 4 cents doesn’t mean that it was always only 4 cents. What probably happened was that Harv’s Car Wash paid the tax portion of the debt except for the 4 cents, but failed to calculate and pay the penalties and interest that had accrued on the original tax debt.
|Late Filing Penalty||97.50|
|Late Payment Penalty||97.50|
Now, was it necessary for the IRS to send two of its agents to the taxpayer’s place of business to collect a $200 debt? Probably not, which is why I am relatively confident that it did so for one of the following reasons:
- The visit was part of a training exercise for a rookie collection agent; or
- The IRS has reason to believe that the taxpayer is not complying with other tax laws, including, but not limited to, the proper classification of employees and the accurate and timely depositing of payroll taxes.