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Ever tried to get customer service from the I.R.S.? I hope you got a little better response from them than I just did! They actually seemed to refuse to answer what I thought was a clearly-written, objective question which asked for clarification of the tax law. See if this jives with anyone else's experience in dealing with the I.R.S.:
As you know, tax issues can get complicated, especially when a one-time type of tax event takes place. I can see by this board that people have many questions with things like capital gains, allowable deductions and tax-shelter plans. The latter is what I had a question with - I knew I was going to take early retirement from a school system and so had them take as much from my pay checks in 2006 as I could possibly afford. Knowing there would be no more checks from here on in, I padded my 403(b) account almost to the maximum allowable limit for '06.
All well and good, the big final day of work arrived. Now it is 2007 but there is one more check to be received: As a public employee, there is a perk in which a payment (in the form of a payroll check) of several thousand dollars is doled out for unused sick pay. If I could, I would like to put most of this into the same tax shelter. The thing is, being almost maxed out for 2006, I would need to have the tax-shelter contribution from this check count in the year 2007 to avoid going over the allowable limit for 2006. But technically I am now retired, we are in a new tax year, and I am several months removed from being an employee. My question, then, was pretty straightforward: Can I do this in 2007?
The person in the payroll department at work said that she didn't see why I couldn't but that before she began to process the check I should first check with the I.R.S. to make sure I wasn't doing something that would get me into trouble down the line.
So, I wrote to the IRS and waited a few weeks for their reply, which arrived this week. Here, summed up, is what they told me:
"Go read the publication."
I DID read the publication, and it didn't exactly answer my question. Why do they think I wrote the damn letter?
I also asked around, I read the laws, I searched the web and read everything that came up on this issue. I found only that, yes, it does SEEM to be something I can do. It seems to fit all the definitions for 403(b) contributions: It is "includible compensation", the payment is given out in the form of a payroll check with deductions, the 403(b) contribution would be made in exactly the same way as other contributions have, etc., etc. Its eligiblity as a 2007 contribution was the only thing in question.
I tried to carefully phrase the question so that it was an objective, 'yes or no' type of thing. I figured that they will not give out tax advice, but I was asking only for clarification of the tax laws. In the time it took to write back to me, to type out the letter and stuff the envelope, he could have easily just answered my question. Why do you think he didn't? Was it so obviously a dumb question? Are they under legal advice to not put anything in writing? I know this isn't J.C.Penny's or Macy's customer service department. But it's the I.R.S. for Mary and Joseph's sake! Where else am I supposed to go to get the tax laws clarified if not to them? He invited me call back if I still had any questions after I read the publication.
I thought I'd rant a little bit here first, to see what any other Fool might have to chime in on the issue. I will then call them back. I promise I'll be polite.
Sunny Jim

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