• Jun 9, 2010
Toward the end of the last millennium, Ford thought it might owe the IRS some money for possibly underpaying taxes between 1983 and 1994. To convince the IRS to halt the accrual of interest on any amount Ford might have underpaid, Ford gave the IRS a lump sum of cash.

However, turns out that Ford had overpaid its taxes, so the IRS had to return the lump sum of cash that Ford used to halt the interest. The IRS did so. But while the IRS held onto Ford's money, that money had gained $445 million in interest in the IRS account. When the IRS didn't pay Ford the interest, Ford sued to get it... and Ford lost. A U.S. district judge declared that the extra amount is not subject to refund. Not that it will make you feel any better, but now you know that it's not just the little guy who gets caught up in the arcanum of the U.S. tax code.

[Source: The Detroit Free Press]


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  • 56 Comments
      • 4 Years Ago
      that is the government for you! when you owe them money they want it now, but when they owe you money, they will do anything they can to keep it from you! no wonder this country is so screwed up!
      • 4 Years Ago
      Oh and to top it all off guess he appointed Judge Patrick Duggan to United States District Court for the Eastern District of Michigan?

      Ronald Regan in 1986.

      So that proves it this is obviously Obama's fault.

      • 4 Years Ago
      It's for this reason it's a stupid idea to have a large withholding out of your payroll taxes. You should aim as best as possible to break even with your taxes.

      Every time I hear someone brag about getting a big tax refund all I can tell them is they are giving the government an interest free loan.
        • 4 Years Ago
        Actually, you should plan to pay a tiny percentage each year, on the 15th. This way, you have full use of your money, lose no interest, and the IRS is forced to spot you a tiny loan from Jan to April.
      • 4 Years Ago
      Sad.
      • 4 Years Ago
      I can't say I feel bad for Ford. They tried to shaft the man, in a way the average U.S. citizens NEVER could, but ended up getting screwed over themselves. And how hypocritical, they tried not paying interest in the first place, so why should they expect interest in return?!
        • 4 Years Ago
        Did you read the article? It was only 2 paragraphs long...

        Ford thought they might have underpaid their taxes, so they gave the IRS a huge lump sum of money to avoid having to pay inerest, but when the IRS looked into it, they determined that Ford had actually overpaid it's taxes so the IRS returned Ford's money, but in the meantime Ford's money had accumulated almost half a million dollars in interest which the IRS didn't return. Ford was pissed, they sued, they lost.
      • 4 Years Ago
      Last year the IRS sent me a notice that I owed $100.00 in additional income taxes. There was no explantation why this was owed. My tax accountant (a CPA & tax specialist) said to pay it because it would cost me more to figure out why the IRS sent me the notice. I paid the $100.00

      Two months later, I receive a check from the IRS for $100.00 with no explanation other than I will need to declare the $100.00 as income, subject to income tax. My accountant said this happens all the time.

      I essentially loaned, interest free, $100.00 to the federal government and they now have the audacity to tell I will need to pay income taxes on the money I loaned them! This is what makes people distrust their government.

      My sympathies to Ford.

      • 4 Years Ago
      This is wrong. Ford was being honest and straightforward. Something our government doesn't understand. They make the tax code so difficult and with too many loopholes. Imagine, if you will, a FLAT TAX. Simple. Everyone is treated equally with respect. No need for an IRS and government could run more efficiently. But no. THE US GOVERNMENT wants a huge staff. They want American to depend of them as much as possible. They pass new laws that have to be enforced. They feel to control the masses for the good of the whole. Sounds like fascism or communism to me. A true republic works for the people. It wasn't designed to control every aspect of our lives for the good of the few. Trust me, the wealthy want this system of government. They can control it. A flat tax put everyone at the same level. The argument can be made that maybe we don't want poorly educated American's with the same power as a Harvard Grad. Take a look at Venezuela or any South American country. But if you look deeply, even Chavez works for the super wealthy. He hides with poor to gain power. There are 10X more poor then middle class and 100X more then the wealthy. Ford did the right thing and gets the shaft. Welcome to United States of our generation. Filled with overpaid bureaucrats and inflated IRS. When the government employs over 30% of our population they will have a foot hold on all us. For someone in every family will benefit from this form of Socialism. That what we are becoming a Socialist country. Our founding fathers are turning in their grave in disgust.
      • 4 Years Ago
      Seems like outright theft to me. Hopefully FOMOCO will take this to the next step.
      • 4 Years Ago
      If "we" have their money they charge us boat loads of interest, but if they have "our" money, it's still THEIR money...bunch of crooks.

      Big surprise the judge ruled in favor of the government......
        • 4 Years Ago
        What many fail to realize is that the country's wealth is generated not just by YOU; but by our collective society. The laws and regulations that create a safe investing environment protecting investor AND those being invested in, as well as all bystanders. You are NOT ALONE in this country, please don't forget that.
        • 4 Years Ago
        Agreed. Many of the IRS tax laws concerning repayment & refunds are a bit "shady". Of course they know this, and so gets the taxpayer to jump thru hoops (via threats of accrued interests, etc) to just pay some arbitrary payment amount.

        That interest Ford's money earned should, at the very least, been applied to their next tax year filing or amount owed. It should've been a $445mln tax credit.
        • 4 Years Ago
        @Luis "That's fine, I'll earn my downrates today, standing up for principles!"

        Nobodies' rating you down for your principles or your standing up for them. They are rating your down because your socialist principles (like "the country's wealth" [shudder]) are abhorrent to the rest of us Americans*.

        (*yes, I know the internets be world wide; please ignore if Luis' comment is applicable in your neck of the woods)
        • 4 Years Ago
        That's fine, I'll earn my downrates today, standing up for principles!
      • 4 Years Ago
      Without getting into a debate about flat tax or socialism I would just like to correct one false statement over and over here.

      The IRS does pay out interest on over payments of taxes. I don't know why they didn't do it in this instance but I know they do it because they did it for me.

      Back in 2005 when I bought a house and paid 2.5 points on the mortgage. When I did my taxes in 2006 I didn't properly deduct the points I paid. I didn't realize this till 2009 when I was going over some oil tax forms and noticed my mistake. I got a 1040X return filled it out with the correct info and sent it into the IRS. About six weeks later I got a letter form the IRS that my amended return was correct and they did owe me several hundred dollars in refund but I had forgotten to have my wife sign the form so I had to have her sign this new form first before I could get the refund. She signed it and I sent the form off. About six weeks later I get a notice from the IRS that I am due XXX in refund including an additional XXX in in interest from the IRS holding my overpayment for three years. I was also informed that I would have to declare the XXX in interest as income for 2009.

      About two weeks after getting the letter the overpayment plus interest was deposited in my account electronically.
        • 4 Years Ago
        right, but in this case the government does not have $445M to give back...pretty sure it's been spent lol...
        • 4 Years Ago
        We are far from bankrupt, we are not and never will be Greece read some of Paul Krugman's work to see why, so we do have the money.

        Now after reading the article I see why Ford didn't get the 445 million dollars. I must say the Autoblog article doesn't summarize what actually happened at all. If you read the Detroit Free Press article you see what really happened.

        Ford did get interest returned to them for the previous overpayment of taxes.

        Right from the article...

        "When the IRS later found that Ford had overpaid its taxes, it gave the automaker a refund with interest."

        So once again we see it is false to claim that the IRS never pays back interest. Obviously they do but what they won't pay back is interest on money that was used to avoid accelerated interest, essentially penalties, on previous underpayment of taxes.

        So the facts of the matter are that Ford did get their overpayment money back plus interest on that money. What they didn't get was interest on the money they paid to avoid/reduce penalty interest.

        And that makes sense. Ford guessed that they underpaid and so tried to avoid higher penalties by essentially pre-paying the penalties. They guessed wrong and so they get that money back but they shouldn't get interest on that money. What Ford should do is fire any accountants that still work for them and worked on this whole situation. They guessed wrong not once but twice.

        You see though facts are no fun. Facts don't make very good stories. Facts are inconvenient. It is much more fun to speculate, leave out key information and then let your ideology drive your arguments instead of the facts.

      • 4 Years Ago
      @Joe

      Right, you want a 15%-17% flat tax so that Kerry won't be able to get away with paying only 14%, instead of the 30-40% he should be paying. That makes a lot of sense.

      What makes the tax code complicated and easier to evade is not the fact that it's progressive (a straight progressive tax code is simple - middle school math, at best): it's the giant mess of deductions, exemptions, etc. etc. A flat tax carrying all that baggage would be equally vulnerable to evasion, _and_ have the added drawback of stifling demand. Or do you think they'll really get rid of tax reductions for married couples, charity donations, business expenditures, company cars, and all that jazz?
        • 4 Years Ago
        @Daiba, It's nice to see somebody using their brain around here. That's not a politically desirable activity in the U.S. apparently. An article about an unfair practice of keeping interest on a tax payer's money turns to diatribe about "socialism" and the (un)"fair" tax that only takes a minute of napkin math to see won't work...except for the top 5-10% that is... Not to mention that they miss the point entirely that it's the tax --code-- that's foul, not the tax rates in the case at hand and leaving the code as it is will only continue the problem.
      • 4 Years Ago
      The IRS would do this to their mother.
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