Doreen Hendrickson 2006 income tax refund

[jg]

No details are available as to the timing of the submission or amounts reported as income for her tax return; but this does seem curious in light of the decision pending appeal in the erroneous reufnd suit against Mr. and Mrs. Hendrickson.

Presumably, the injunction against using CtC methods to file can not go into effet until the appeal is resolved? Or, lacking a stay does the injunction apply when issued by the court?

[webhick]

I noticed that it only says her name on that check. Filing separately...perhaps as a way to work around the system?

[RyanMcC]

Wouldn't it take a while to earn $4.39 interest on a $30 check?

[jg]

Wouldn't it take a while to earn $4.39 interest on a $30 check?

Yes, it would but should not the check then be for 34.39? Interest earned would imply that the IRS was processing the 2006 return while the suit for erroneous refund was being litigated.

Why is any check being issued to a taxpayer that had open (albeit disputed) balances for prior year(s)?

[RyanMcC]

Wouldn't it take a while to earn $4.39 interest on a $30 check?

Yes, it would but should not the check then be for 34.39? Interest earned would imply that the IRS was processing the 2006 return while the suit for erroneous refund was being litigated.

Why is any check being issued to a taxpayer that had open (albeit disputed) balances for prior year(s)?

Id assume the check was for $25.61 then $4.39 interest was earned on that. I don't know what kind of interest the IRS pays these days but if you can earn that much interest on a $25.61 balance in under a year I'm clearing out my savings account and sending it to the IRS, thats a pretty darn good APR. I'd think it has to be from a previous year's tax return, I'm just guessing though.

[jg]

My guess was that the $30 was for the excise tax refund.

A taxpayer with one exemption on the return that had no total tax due and no other payments in 2006 could get a $30 refund. See http://www.irs.gov/newsroom/article/0,, ... 33,00.html

[webhick]

Id assume the check was for $25.61 then $4.39 interest was earned on that.

That's the way it works, from what I've seen. The amount of the check is $25.61 plus the $4.39 listed on the check as interest.

[webhick]

My guess was that the $30 was for the excise tax refund.

Unlikely, since the check amount includes the bit of interest listed. Since it's for 12/06, if she got the excise refund, then that check would be for more than $30.

[LPC]

Id assume the check was for $25.61 then $4.39 interest was earned on that. I don't know what kind of interest the IRS pays these days but if you can earn that much interest on a $25.61 balance in under a year I'm clearing out my savings account and sending it to the IRS, thats a pretty darn good APR. I'd think it has to be from a previous year's tax return, I'm just guessing though.

The rate for underpayments was 8% during all four quarters of 2007.

The check does indicate that the refund was for 2006, which means that the interest could not have started to accrue until sometime in 2007. The check was dated 1/4/2008, so she got one year of interest at most.

Ignoring daily compounding, in order to earn $4.36 of interest in one year, the principal amount would have had to have been at least $55, not $25.

So it looks as though at least some of her refund was diverted to another liability, even while the refund earned interest. The questions are (a) what liability, and (b) how could the IRS be issuing refund checks at the same time they are suing for the return of an erroneous refund?

[Quixote]

jg is right. It's a refund of the telephone excise tax. The $30 default refund for a single filer comprises $25.61 credit and $4.39 interest.

Why is any check being issued to a taxpayer that had open (albeit disputed) balances for prior year(s)?

Certain litigation results in markers being set on an account that prevent the automatic offset of refunds. The marker set to indicate litigation to recover an erroneous refund should not result in such a freeze being placed on the account, so my money is on a data entry error when the marker was input.

[LPC]

jg is right. It's a refund of the telephone excise tax. The $30 default refund for a single filer comprises $25.61 credit and $4.39 interest.

In which case the interest is not for one year, but for a number of years.

[Missing User (23972)]

jg is right. It's a refund of the telephone excise tax. The $30 default refund for a single filer comprises $25.61 credit and $4.39 interest.

In which case the interest is not for one year, but for a number of years.

Hi! Long time lurker, first time poster. Signed on when I saw the subject.

I work at the Austin Service Center, so I have some insight. The interest on the telephone excise tax does go back to 2003. However, the standard amounts (30, 40, 50, 60) are set and dont collect any more interest after May 30, 2007. Claiming an actual amount (which one would need to file a form for) is a different matter.