Taxable Talk

One of my clients called me this morning and asked about an email he received, purportedly from the IRS. I told him that, in general, the IRS doesn't send out emails. The email he received told him that he had a "small" refund coming, and to click on a hyperlink to enter in some "minor" personal information to get the refund.

It's a phishing scam. According to snopes, this has been around for a year or so. The Washington Post ran a story on this last week. And the IRS itself has issued its own warning.

So don't click on the link. Never give out your social security number, bank account information, or other personal information to a website. Because if it sounds too good to be true, it probably is.

Budgeting at the local (municipal, county, and township) level usually begins with the treasurer/tax collector telling the board here's how much money we're going to receive this year in property taxes based on the property valuation. The board then comes up with a budget. (Yes, I'm simplifying the process; however, this is essentially what is done.)

In Porter County, Indiana, someone made a typographical error on the valuation of a house in Valparaiso. Instead of the $121,900 it's really worth, that unknown individual typed in $400,000,000. Typos happen all the time; usually there's a process in place to check for things like that. I would have expected if the assessed valuation increased by $400,000,000 that someone would have looked to see what triggered it. They would have noticed that a house's value increased just a bit; someone would investigate and the typo would be corrected.

But that didn't happen. And all the agencies--cities, counties, school districts, etc.--budgeted based on the erroneous figure. The owner of the house decided not to pay taxes based on the $400,000,000 assessed valuation.

Now many, if not all, of the government agencies impacted by this will have to have layoffs. All because of a typographical error that should have been caught if proper budgeting analysis were done, and all of the agencies involved notified of the error.

News Story: CNN