W-2 with $1 million withholding drives IRS mad

This week we return to Florida (yes, we were just there last month) to the story of Tampa resident Ramon Blanchett, who received a refund of $980,000 after filing his taxes in 2017. The problem? His reported income was only $18,497.1

The self-described freelancer had two W-2s during the tax year, one from a nursing home and the other from a restaurant. One of the forms incorrectly listed his withholding as $1 million, which led to the refund check from the IRS.

The bank where Blanchett deposited the money suspected fraud and eventually closed his accounts. He went to a credit union next, depositing the money into multiple accounts while "falsely representing that the funds were from the estate of his deceased father," according to a federal complaint.

Everyone grieves differently, apparently, and Blanchett went out and bought a 2016 Lexus RC350 for $49,117.

Blanchett has not been charged with a federal crime, but a seizure warrant allowed the IRS to take the car and the more than $900,000 that was left in his accounts. And the IRS is now going after the $809 refund Progressive Insurance sent to Blanchett because he no longer has the car. So much for driving off into the sunset.

1 www.tampabay.com/business/a-tampa-man-reported-an-income-of-18497-the-irs-sent-him-a-refund-check-for-980000-20190213/

Document organization — worst practices

The internet is a wealth of information, like this list of the worst ways clients have presented their documents to tax preparers:

  1. A client gave us their documents in a nice three-ring binder, with each page in its individual page protector. I have to take each page out, one by one, to scan then put it back in.
  2. A client stapled every single document she had to another document, resulting in about 60 pages all stapled individually to one other single document = 60+ staples.
  3. A client scanned each of her documents to us as individual .jpg files, including each page of her combined brokerage statement. Half of them are corrupt and don't open.
  4. A farmer brought in a shoe box and a 2'x3' plastic tub, both full of receipts. No explanation, no separation. After going through them for hours, over half of them were fast food receipts.
  5. I just finished a client who kept receipts for everything they spent money on all year. It was reasonably organized by category, but no summaries or totals. 200+ pages of medical expenses, which after I added up, did not make it above the 10% threshold.
  6. An online client didn't understand they needed to upload their W-2s to me; they wanted to read them over the phone.

The full thread is at:


If you can add to this list, e-mail us at tribune@spidell.com, or reply to the Tribune e-mail.

Spidell's Tax Season Tribune is a source of fun during tax season, and it's as enjoyable for us to write as it is for you to read. But our Message Board at www.caltax.com is so full of IRC §199A questions, so we'll start to include a tax tip with issues of the Tribune. It will be at the end, so you don't have to read it if you only want humor!

Tax Tip: Safe harbor statement

A taxpayer electing to use the IRC §199A safe harbor election for rental property must attach a statement to the return. The statement must be signed by the taxpayer(s). For an e-filed return, attach a PDF of the printed, signed statement. Many tax software providers now include a statement, and we have created a sample of our own.

For more information on the election, see IRS Notice 2019-07: www.irs.gov/pub/irs-drop/n-19-07.pdf

A few fun facts about this week's writers:

Austin LewisAustin Lewis does more editing than writing for Spidell, so it's not often that you see his name in print. But he traveled to Texas last year and found his name all over town.

Kathryn Zdan, EAKathryn Zdan, EA, is living in the past, still using an old film camera and writing real letters to friends. She loves classic, foreign, and horror films, and has watched Frasier in its entirety at least five times. Sherry, Niles?

Lynn Freer, EALynn Freer, EA, is a French literature major, so of course her favorite vacation destination is France. Here she is dining on mussels and fish stew near Nice.

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