Please-no checks for over $100 million!

[Famspear]

From Kelly Phillips Erb ("taxgirl"), from her weblog at Forbes, from Sept. 8, 2015 (excerpt):

IRS To Refuse Checks Greater Than $100 Million Beginning In 2016

Owe $100 million or more to the Internal Revenue Service (IRS)? Better write that check now.

The latest edition of the Internal Revenue Bulletin, Bulletin No. 2015–36, dated, September 7, 2015, has this to say about the Federal Revenue’s new check policy.

The Federal Reserve will not accept checks that are larger than $99,999,999.00 and agencies have been directed to return these checks to the originator. Beginning January 1, 2016, IRS will begin returning checks for more than $99,999,999.00 to the originator.

The notice was posted in the latest edition of the Bulletin under headings for income tax, gift tax, estate tax, self-employment tax, employment tax and excise tax.

To be fair, the IRS isn’t trying to make it more difficult for multimillionaires to pay their tax bills. Rather, this is a reminder of a ruling previously announced by the Bureau of Fiscal Service (BFS) applicable to all federal agencies. The rule as outlined in that notice states the large check policy per the Treasury Financial Manual (TFM), Volume 1, Part 5, Section 2060 that “agencies must not accept any check written for more than $99,999,999.99, as the Federal Reserve will not process checks over that amount.” The Federal Reserve Banks Operating Circular 3, Section 3.2, states that the Federal Reserve Banks do not handle any checks over $99,999,999.00. No, that’s not a typo: it is indeed a 99 cent spread. I’m not sure why the numbers are differen[t] but this discrepancy, of course, brings up the real question of what happens if you write a check for, say, $99,999,999.25? My recommendation is that you not try this at home......

http://www.forbes.com/sites/kellyphilli ... %20Forbes)

[Famspear]

For those of us who need a more specific citation, it's IRS Announcement 2015-23, 2015-36 Internal Revenue Bulletin 311 (Sept. 7, 2015), incorporating a June 9, 2015 memorandum from Paul J. Mamo, Director, Submission Processing SE:W:CAS:SP, Internal Revenue Service, Atlanta, Georgia.

The IRS is suggesting that for payments over $100,000,000 (actually, for payments over $99,999,999.00), the taxpayer write two separate checks for lower than that amount, or use Fed Wire.

(sigh.......) This will really put an extra burden on me, of course, with my high annual income level and large tax payments......

[Jeffrey]

So now I need to write two checks for $50 million?

This injustice will not stand.

[eric]

For those of us who need a more specific citation, it's IRS Announcement 2015-23, 2015-36 Internal Revenue Bulletin 311 (Sept. 7, 2015), incorporating a June 9, 2015 memorandum from Paul J. Mamo, Director, Submission Processing SE:W:CAS:SP, Internal Revenue Service, Atlanta, Georgia.
The IRS is suggesting that for payments over $100,000,000 (actually, for payments over $99,999,999.00), the taxpayer write two separate checks for lower than that amount, or use Fed Wire.

I would be very surprised that they ever accepted a cheque for 100M$ or above. There is only room in the amount field on the cheque micr line for ten digits and even insanely large dollar value items are mechanically processed by the Fed. Bluntly, the hardware and the software for all the cheque processing services makes use of the fact that there are only ten digits and in most cases fills in missing digits with leading zeroes. Pointless side story from an old cheque processing guy - we were working on a algorithm to use these leading zeroes to make our recognition software self learning and were surprised the first time we took it out in the field, by sheer bad luck we picked a financial institution that routinely handled items with denominations like 80 M$ or so.

[Burnaby49]

Biggest cheque I ever handled as a CRA auditor was $11,000,000. I was reviewing an individual's date of death final tax return and I noted what seemed to be an error. Not to get too technical but if an estate sells shares at a loss within a year after death the loss can be carried back to the deceased's final return. In this case the estate redeemed shares in a private company for (I'm guessing now, forget the figures) their fair market value of say 30,000,000. The shares had a paid Up Capital (PUC) of $1. Under the Income Tax Act any amount received on the redemption of shares in excess of PUC is deemed to be a dividend rather than proceeds of disposition. So, under the Act, the estate had disposed of shares with a tax value of $30,000,000 for $1 and the estate had suffered a $30,000,000 accounting loss which it elected to carry back to the deceased return to offset capital gains. Fine, all correct and legal.

So I checked the estate return to see how they'd handled the $30,000,000 deemed dividend. It wasn't there. I called the estate representative, an accountant at one of the majors, and asked him what happened to the dividend. Huh, what dividend? The deemed dividend under subsection 84(3) of the Act. I'll check and get back to you. Next morning I got a call to come down to their office. They handed me a cheque for $11,000,000 to cover the tax on the dividend. They'd "forgotten" to include it in the estate return.

[NYGman]

In the late 90's I took a $42,000,000 check and payment voucher from a client to the IRS in downtown NYC (Fed building maybe, I can't recall, it was like a prison to get in to). The check was made out to IRS. I did think about changing it to MRS NYGMAN and cashing it, but obviously, I didn't. But it did cross my mind. Why they made it out to IRS I will never know, as it was supposed to be US Treasury, but it was accepted. I did feel a bit paranoid carrying that large check on the E Train, but I made it there without loosing it or cashing it myself

[eric]

Biggest cheque I ever handled as a CRA auditor was $11,000,000. I was reviewing an individual's date of death final tax return and I noted what seemed to be an error. Not to get too technical but if an estate sells shares at a loss within a year after death the loss can be carried back to the deceased's final return. In this case the estate redeemed shares in a private company for (I'm guessing now, forget the figures) their fair market value of say 30,000,000. The shares had a paid Up Capital (PUC) of $1. Under the Income Tax Act any amount received on the redemption of shares in excess of PUC is deemed to be a dividend rather than proceeds of disposition. So, under the Act, the estate had disposed of shares with a tax value of $30,000,000 for $1 and the estate had suffered a $30,000,000 accounting loss which it elected to carry back to the deceased return to offset capital gains. Fine, all correct and legal.

Ha, so you're the reason a simple loss carry back on a deceased member of my family's estate is taking so long to clear up.... just kidding.
As I mentioned previously, I once had the experience of handling cheques for what I thought at the time were ridiculous amounts. We would take piles of cheques approximately 4 feet high after they had gone through proof and encode and capture the raw electronic data off their micr line, seemingly secure in our confidence that 75% of them would be for under 25$. Little did we know when we first began the project that the majority of them were for well over a million dollars, many for up to 80 M$ was the biggest I saw. The bank that let us "borrow" the items handled many of the transactions for a country in the Middle East (purposely un-named) who was making large transactions in the US for military supplies.

[Famspear]

At the other end of the monetary spectrum, I recall that I used to get royalty checks from an oil company for 3 cents, 4 cents, 6 cents a month, on a regular basis. This was back in the 1980s, I think. Even back then, the cost of postage alone made this a silly thing to do.

Still, I deposited each and every check.

I'm such a money grubber......

[Burnaby49]

Ha, so you're the reason a simple loss carry back on a deceased member of my family's estate is taking so long to clear up.... just kidding.

If I was responsible you've been waiting a long time since I retired eight years ago.

[eric]

At the other end of the monetary spectrum, I recall that I used to get royalty checks from an oil company for 3 cents, 4 cents, 6 cents a month, on a regular basis. This was back in the 1980s, I think. Even back then, the cost of postage alone made this a silly thing to do.
Still, I deposited each and every check.
I'm such a money grubber......

For the simple privilege of allowing a gas company to extract shale gas from 400 metres under my house using a well drilled 1500 metres away I am eligible to receive the princely sum of 6$ per annum until they shut down the well. I took the one time payout of $25 so I could buy a pack of smokes and a six pack of beer with my fortune as a petroleum baron. BTW, the lifetime of that type of well is typically only five to seven years at the most around here so I thought it expedient to cut my potential losses.....

[Duke2Earl]

I was minding my own business one morning at my office when the secretary brought me my mail. In the mail was an brown envelope letter from the IRS that looked like a tax refund, green check and all. I opened it and it was a check for $42 million and change made out to me as attorney for one of my clients (a Fortune 500 company that will remain nameless). I was impressed. I entertained visions of cashing the check and disappearing to some tropical paradise. Slowly sanity returned. I called the Director of Tax at the client and asked what's up. It turns out that they had vastly overpaid their estimates by forgetting to include their payment into their pension funds. Quite a boo boo which he was anxious that upper management not discover. I asked him why he had not signed up to have the IRS wire the refund directly into his bank account and he had never heard that was possible either.

What happened next was I faxed him a copy of the appropriate Rev. Proc. and the necessary form with instructions that it be filed that very day so that further refunds could be wired to his bank. And I then got my intern to make immediate plane reservations for the next flight to the city where the client was located and told him to hand carry the check to the Director of Tax as soon as possible. It was only a flight of an hour and a half or so and there was regular service from National Airport so my intern was even able to make it home the same night. And thus the largest check (with my name on it) I have personally handled passed from my life. I did send a rather large bill for this service which the client paid without a whisper of complaint.

[bmxninja357]

So the sov cit sends a check for a hundred million and one dollars to the irs to cover any owed and future taxes then claims they refused payment and claims the debt was extinguished. ...

Wait for it to happen....
Wait for it...
Wait for it...

Peace,
Ninj