The term is Kleptocracy

More tax issues and, for a change, it's not the fault of my employer.

I received a letter from the PA Municipal Service indicating that I had apparently not paid my taxes for 2001, 2003 or 2003. With taxes and penalties they were hitting me up for over $1,600!

It took two hours of calling to finally get through and figure out that I can resolve this (hopefully) by sending them my W2s, which they somehow had no record of ever receiving (though they did have data on how much money I made for those years. I wonder how they got that without having my W2 forms.). Apparently the process works this way: My employer withholds the appropriate boro taxes from my paycheck. They send that money in a big block to. . . somewhere. At some point, the municipalities, through the PA Municipal Service, go to that block to withdraw the money for their coffers. The strange thing is that this is not done annually but every 5 years. So, when the request came through, PAMS suddenly discovered in 2007 that they didn't have the proper verification for four years previously, instantly racking up nearly $600 in penalties and interest.

Seems either slipshod or dishonest to me. Either they lack the capability to process this in a timely manner or they intentionally wait to process so that they can generate more revenue. We are told by this statement at the front of the IRS website to "Keep these records for at least 3 years from the date your return was due or filed" but hidden in Publication 552 is a table that says that "If you do not report income that you should and it is more than 25% of the gross income shown on your return" you should be able to provide that documentation back 6 years. They say, "Keep your records for three years but if we audit you, we'll go back 6 years and fine or imprison you if you can't prove your innocence." Is it any coincidence that the PA Municipal Service is asking for information exactly in that window; records from 4 to 6 years back? Had I thrown away my records after the recommended 3 years I wouldn't have any proof that this money was already paid and I would be stuck with paying them again plus a fine for their having lost my records.