Monday, December 07, 2009

IRS Targets a Woman for Being Too Poor

You think I'm kidding (via). The short version is that they took a look at her stated income and decided there was no way for her to survive in Seattle making that much. So they audited her, claiming she owed them $16,000 in back taxes (her annual income is only $18,992).
She couldn't pay it. Her dad, Rob, has run a local painting business, Porcaro Power Painting, for 30 years. He asked his accountant, Driver, for help.

Rachel's returns weren't all that complicated. At issue, though, was that she and her two sons, ages 10 and 8, were all living at her parents' house in Rainier Beach (she pays $400 a month rent). So the IRS concluded she wasn't providing for her children and therefore couldn't claim them as dependents.

She stood to lose what is called earned income tax credit, a refund targeted to help low-income workers. You qualify only if you're working, as Rachel has been.

Driver quickly determined the IRS was wrong in how it was interpreting the tax laws. He sent in the necessary code citations and hoped that would be the end of it.

Instead, the IRS responded by launching an audit of Rachel's parents.

"I was floored," says Rob Porcaro, 59. "I get audited now and then in my business, so I've been through it before. But to have them go after me because of my daughter, well, I've never heard of anything like it."

The IRS eventually backed off the audit, but did insist that Rachel was not supporting her own children. So now, she can't claim them as dependents (and she paid the IRS $1,438, plus penalties and interest, as a result).

The article notes that much of the IRS' "soak the poor" mentality is traceable to a longstanding Republican vendetta against the Earned Income Tax Credit -- a rebate for the working poor. Insisting that it is a vehicle for massive fraud (despite almost certainly costing the government considerably less), they've urged the IRS to target the poor. It's delightfully symbiotic: the GOP shields its rich patrons, and the IRS gets to pick on folks who generally don't have the resources to fight back. Everybody wins, save lady justice.


Anonymous said...

Blame it on the Rebubs, Who's in power now??? Ahhhh the tax cheating Democraps. Go cry on Obama's lap and see what he does for her.

PG said...

Anonymous evidently didn't read the part of the article that notes the IRS investigation began during the Bush Administration ("It all started a year ago ... she was notified her returns for both 2006 and 2007 had been found 'deficient.') and that this was characteristic of the Bush Admin ("In 2006, credit recipients such as Rachel were more than twice as likely to get audited as the rest of the 140 million individual tax filers.").