The IRS won't answer my question -- long and whinny

Damn. I waited on hold for an eternity to talk to the IRS (actually, only about 15 minutes, but it makes the story sound better to start off bitching about the wait).

I’ve got a couple of questions concerning Form 1116 Foreign Tax Credit and example of how the carryover for foreign tax credit is calculated.

I file my US taxes every year, although I don’t owe anything (as I live in a foreign country, I get a really high foreign earned income exclusion, and then am able to get credit for a percentage of my relatively high Japanese taxes).

However, in 2010, because of (long explanation here), my Japanese taxes weren’t enough to offset the US ones so I’m looking at how to calculate the carryover from previous years. I read through the example on Publication 514 Foreign Tax Credit for Individuals and think I understand. I will make a significant difference for me.

However, since it’s a fairly good amount of money, I call the IRS to confirm if my understanding is correct. First, I try one of the branches overseas, and the guy clearly is wrong.

So I call the center in Philadelphia, which is when I get put on hold.

I ask and the guy says he don’t know! I walk through the example in P514 and he says it seems to be correct, but that “seems to be” bothers the hell out of me. There isn’t anyone he can ask, so he advises me to use a professional!

These are their rules, and they don’t know how it works? :confused:

Sorry to hear about the lack of help from the IRS, but it doesn’t surprise me. You might want to try a service like TurboTax. I guess it wouldn’t know about carryover data from previous years if you haven’t been using it all along but I think they let you access actual competent human help for a lower cost than walking into a CPA office, and there’s some type of audit shield service offered if you’re really concerned. And of course it would do the e-filing for you.

If this is long and whinny, and not particularly funny, don’t blame me, I warned you!

In my opinion, as a businessman, it’s absurd that they don’t have any resources to help. They guy told me things like “this type of question is really complex.” Duh!

I can see that you don’t need to train all your phone people how to answer all every single question. Most overseas filers are going to be asking questions which are there on the top page: Yes, you still need to file if you are overseas. Yes, you get an extension of two months. Yes, that makes it June 15, not April 15. etc., etc.

But occasionally you get people who run into a real problem, and there should be specialists at IRS who know the rules, because that organization is the one which make the rules.

I’m trying to do my legal obligation. I’m not trying to get away with some obscure loophole and fishing for dubious ways to cheat the government.

I used to pay some service hundreds of dollars to prepare my taxes, until one year I had to pay $1,200 and the guy didn’t let me know there was a really easy to refile and get it back, so I made my own excel spreadsheet which ties together the 1040, Form 1116, Form 2555, the AMT worksheet, Form 6251, the special calculations for taxes for overseas, etc., and I plug in the numbers.

So why can’t I get someone to let me know how something is calculated?

Think of it this way: instead of paying more in taxes so that the government can afford tell you how to file your taxes properly, you spend that money on a tax professional of your own choosing. Individual liberty and free markets!

The things is, there’s nothing special about taxes in this respect. Any sufficiently complex system will have difficult concepts and gray areas for which the answers are either hard to come by, or worse, don’t even exist until a court makes an interpretation. Immigrants, social security filers, and lots of other people subject to government rules are forced to pay for professional experts to sort things out for them. Just be glad you’re not trying to get disability benefits or asylum status.

You might try the IRS’s Taxpayer Advocate Service. I know nothing about it except that it exists.

I would agree with this, except that this particular question should be straightforward. It’s part of an example in the publication, so an expert should be able to look at that instantly and say yes or no. It’s just irritating that they don’t have people who are experts.

I’ve had to deal with Japanese bureaucrats on seeing if our products fall under a particular requirement for registering products under the Japanese safely law, and the people there weren’t able to tell because it was a gray area. OK, I can understand that. But this is looking at their own example in their own publication and saying yes, this means that.

My wife works with the Japanese and the Taiwanese ALS associations.

The only processing plant for the special food for ALS patients was destroyed in the tsunami. There are a number of ASL patients in Japan who are dependent on this and so the Taiwanese ALS association quickly raised enough money to purchase sufficient food from a US pharmaceutical company for a couple of months.

The relevant Japanese government office is refusing to allow the shipment until it goes through the normal approval process, something which takes months, if not years. :frowning:

They are trying to get a Diet member to appeal to the Minister to waive the rule.

You could do what my friend the former tax-preparer did when faced with a poser of a question: call the tax authorities multiple times and record the answers and who gave you them. Use the answer that is most favourable, and cite it and its source if you get questioned. :slight_smile:

I recommend that you continue to confine your commentary to the written word. If you talk about it all the time, you could wind up a little horse…

I’ve had some contact with IRS myself, the most interesting incident being the time I foolishly endorsed previous years’ refund checks and filed them with 1040 for the next year’s tax.

Has anyone else ever tried that? First you get a “Thank you for your donation” letter :smack: Eventually, they credit you with the principle amount of the checks less the interest portion. That’s right. If the check is for $8000 + $1000 interest it has a cash value of $9000 redeemable at any ordinary U.S. bank, but you’re credited with only $8000 if you send it, as I did, to the IRS. :dubious: :smack: :confused: Does this make any sense to anyone ?

I’m not going to find a cite for it, but I think GWB “saved taxpayer dollars” by reducing IRS staffing, despite that IRS is certainly a profit center!

I’ve contacted them, mainly to ask how the confiscation of interest I described above could be justified. She seemed to devote some time to my case, eventually citing a IRS Regulation that allowed them to illogically confiscate that interest. Along the way, I made some suggestions; she said they were good suggestions and that I should find an on-line IRS suggestion form and submit them. :smack:

I think I’ll try the Advocate center and see if they can help.

If not, it may make sense to use a professional or at least try a tax preparation software.