I got a letter from the Ohio Dept of Taxation today

Informing me that my state refund is being withheld this year so it can cover something from 2002.

I find that odd because up until 2007 I filed 1040EZ with no dependents, same job, same exemptions, no spouse, no property, no additional income—the EZest of all EZ filers. I’ve always gotten a refund, never huge, not a significantly different amount from one year to the next. The only thing I remember from that year, if I have the year right, was that check I got from George Bush. That $300-ish refund incentive check thing that we all got that year.

After I filed for tax year 2002, I received a letter telling me I was getting an additional refund because of some adjustment they made in my tax filing. The letter didn’t explain why.

Now apparently they’re taking that back, plus some.


They did this to my parents around ten years ago. “Hey look, we found more money for you. Actually no, now that it’s been a couple of years we were wrong and want it back. Plus interest.”

I’m no tax accountant nor attorney, but I’m told that federal income tax for errors can only go back for three years. In other words, we’re now dealing with tax year 2010, so tax year 2007 is dead and done with. I’m also told that even with that 3-year limitation, they can notify you of a discrepancy, and then have an additional three years to resolve it, effectively making it six years. Even so, that would make anything before 2005 Ancient History. State tax agencies are supposed to follow a similar time limitation.

Anything in excess of that time limit would have to be the result of criminal activity, not simply a violation of tax code.

Something similar happened to my parents - back in '06 or '07 they were given a refund they didn’t qualify for. They even contacted the IRS about the mistake and were told “no, no, it’s correct.” Wisely, they put the money away - it was several thousand - and didn’t touch it. Sure enough, a couple years later the IRS contacted them about the improper refund and in the letter, they were told that since the mistake was not theirs, the IRS would graciously not charge them interest which would have totaled x hundred dollars. :rolleyes: They paid back what they owed. Several months later they were notified that while their payment had been received, they had neglected to include the interest, and still owed x hundred dollars. A few rounds of phone calls and a fax of the original letter later, they were assured, “no, you’re right, you don’t owe the interest, don’t pay it. You’re fine.” A few months later, they received another notice that they had still not paid the x hundred in interest, and now owed interest on the interest. A few more phone calls later, and a number of people saying “I don’t know why this wasn’t cleared up the first time” and supposedly they again still don’t owe the interest. It’s been several months now, and no further contact. Fingers crossed…

Give them a call and ask for an explanation. It can’t hurt and it might help.

State tax laws can be different. My understanding is that for California, the statute of limitations is four years, not three, so they can go back one more year than the feds can.

It’s hard to imagine that Ohio would have such a long statute of limitations that an issue from 2002 would still be in question, unless it was a matter of criminal liability, which, if the story is true, is unlikely.

I don’t know anything about Ohio income taxes, but just wanted to mention that the statute of limitations (SOL) to collect taxes might be much longer than the SOL to assess them. For example, generally, the IRS has 3 years to audit a tax return, but 10 years to collect the additional tax after the audit.

Here’s a link to the Ohio Department of Taxation FAQs about assessments.

Wouldn’t I be informed if my taxes were being audited? This is the first non-refund-check communication I’ve ever gotten from the ODT.

p.s. No criminal activity here. I’m just a regular old tax-paying, law-abiding citizen!

It seems like you should have been notified of any proposed changes to your tax return, and given time to respond to those changes. The letter you received probably indicates someone you can contact, or what steps you can take if you disagree. If not, then I guess you’ll have to call the general help line.

I’m curious to find out what ODT will say. Maybe its records indicate that they sent you notices, but those notices came back as undeliverable (e.g. because you moved). Or maybe a notice was generated, but for some reason never actually mailed (not that ODT would ever admit it). Most likely, they’ll tell you that they sent you something ages ago, and as far as they’re concerned, you’ve received it.

Please keep us updated.

So…here’s the story:

I lived at 2 addresses in 2002. I have a very limited understanding of this school district tax concept, but I guess I’m being fined not only the amount that they withheld from my state return ($340), but also an additional $160 because I didn’t file school district taxes for 4 months that I lived in a different school district at the beginning of that year. Who knew? Not me.

Here’s the awesome part: In order to just take a chance at having the penalty reduced or removed, and it’s no guarantee AT ALL, I have to have signed and notarized statements from both of my landlords (who were friends that didn’t have me sign a lease) stating that I lived at their homes/in their respective counties for X number of months (neither of them lives remotely close to me now), a letter explaining that I had no idea I was supposed to file school district taxes as a part-year resident, and re-filed state taxes for both counties for that year. All as a very long shot that I might get this fine even reduced by a little bit.

And trust me, I’m in no kind of financial position to take this hit in addition to the taxes I owe this year. Fantastic.

Sorry to hear that. Maybe it’s worth a try to speak to the manager of whoever told you to jump through all these hoops for a potential penalty waiver.

Managers tend to have more discretion. So while a regular employee may need to have all of these notarized statements to justify reducing/removing a penalty, the manager may waive a penalty based on only your affidavit. Or, at least the manager should be able to say: if you provide me with all of these things, I’ll definitely take off the penalty.

I wish I could give you some better feedback, but for the last few years smaller taxation entities in Ohio at least have been getting really sporty with collections. Basically they pay companies to come in and go through their old records to find “new” owed taxes.

I must say, from the sounds of what you you describe they really must have dug pretty deep here. Usually the school/local income taxes are pretty low (~1%) range unless you’re in a very expensive school district, and you would have had withholding for those in your paychecks for that period that should have completely covered the amount owed, regardless of that you filed. You will need old pay stubs to substantiate. Additionally, the amounts sounds off. At around 500$ total of what you list, call 1/2 penalties and for only four months, that would imply you would have had to make about $75K that year. Sounds like they filed a tax lien and you probably never got the notices.

Here’s how I handled our run-in with this:

My wife got hit with a letter for a joint taxation area last year, with taxes they claimed owed to them from over 9 years old at the time. We also no longer live in the state, so they couldn’t really touch us. They did have the gall to send us a lien letter for a rather petty amount (55$ past due, + fees getting around $350) given the paperwork involved, including the registered letter they sent.

I’m a CPA in Ohio, so I do know a few things about taxes in the state, and this really smelled fishy. Basically I called up the finance director, and called him on the carpet on the situation with regard to knowingly filing out of date tax requests, trying to scare people into paying. After a couple of “discussions” with him over the phone, and basically saying that he’s already invested more in this than he’s going to get out of it otherwise, I tossed him a check for the original past-due and he wrote the rest of it off. Only reason I did that was I didn’t want a stain on the credit report later, if they continued to be sporty.

Bottom line - you CAN negotiate on this and know that most of these collections are pretty hard to get otherwise. I’d get on the phone, and find out who you need to talk to to get this sorted out.

Should I be looking for some kind of CPA to help me do this? Or would this be a job for a lawyer?

In my experience, when I am up against something like this with a legitimate plea (and actually I’ve never been up against the state, so I can imagine this would only be worse) I rarely get my way, no matter how many hoops I jump through.

I’m feeling tempted to send a letter explaining my situation and the fact that I had no idea that I was supposed to file as a part-year resident, and re-file my taxes for that year, and make a plea for them to reduce/remove the fine, without all the rest of the hoop-jumping.

I have never had to prove where I lived with notarized documents at any other time and the State of Ohio has taken my word for it, so why should this time be be any different? I just need to re-file my taxes and ask for mercy.

Or at least that’s how I’m feeling today.

Did your employer withhold any school district taxes that year? Did you work for the same employer all year?

I’m not sure I even know the answer to this. I had the same job that year and the year preceding and following. It was a corporate job, so all the expected taxes came out, fed, state, and local. Are school district taxes included in this? I don’t know. Maybe school district taxes are based on where you live and not where you work? Maybe that’s why you identify your school district on your taxes every year?

Before this, I had no idea WHY I had to ID my school district on my tax form. I don’t have kids. I would have no idea how any of that comes into play. I just fill out the box on the form. (Not any more, I guess) I know that makes me sound like a moron, but honestly, I had no idea.

You probably want an Enrolled Agent- which is sort of like a CPA (many are CPAs), but a different certification that places a greater emphasis on representation of the taxpayer before the tax agencies. I can shoot you a link in PM that’ll help you find someone, if you’d like.

Sorry to take so long to get back to this thread. I agree… However you may find that the cost is more than what you’re out, since I think we’re only talking a couple hundred dollars here.

As a side note, these types of situations arise more and more now a days that companies have gone to 100% electronic payroll (i.e. Web based pay stubs). I am sure most people don’t even look at their pay stubs when they got a paper check, let alone having to go online to find it. No matter who you work for, it’s worth while to check your paychecks periodically. The Payroll people are human too, and it’s easy to use the wrong withholding, or apply an old tax table.

When people call us with cases too small for us to even touch, I give them pretty comprehensive advice on how to fix it themselves. I’m guessing if the OP’s issue is a small one, he’ll run into similar advising :).