Furloughs Not All Bad
Wading through all of this government “shutdown” stuff is a real chore. Some government folk are indeed still working, while some are not.
Take IRS, f’rinstance – seems about 91% of the 95,000 Revenooers are, indeed, out of the office until further notice. Try calling that auditor who’s working on your case – get ready to receive a recording about how they’re gone for a while.
Indeed, if you really want to doze off, check out the 59 page IRS “Shutdown Contingency Plan” wherein all of the agency’s functions are analyzed, and found to be either important enough to keep going, or otherwise “nonessential.”
Of course, we keep wondering how any “nonessential” employees have a job in the first place, but that’s a story for another day.
And from our IRA rollover department comes word this week that IRS may not be quite as lenient as you may think, when it comes to enforcing the 60 day rollover requirement. Recall that you can actually take some dough out of your IRA, and use it for whatever purpose you want, as long as you repatriate it within 60 days – if you do, the temporary “borrowing” is not treated as a distribution on which you would otherwise have to pay tax.
And over the years, IRS has actually been fairly liberal in interpreting this rule – ruling often in taxpayers’ favor when the 60 day time limit was missed because of some slip up or other – usually on the part of the IRA custodian or bank. But in a recent private letter ruling, IRS refused to waive the 60 day rollover requirement for a taxpayer whose bank failed to advise her of the 60 day deadline.
In other words, ignorance of the law is no excuse.
As we mentioned, IRS may waive the 60 day rule if a bloke suffers a casualty, disaster, or other event beyond his reasonable control, and not waiving the 60 day rule would be just downright unfair.
The Revenooers will consider several factors in determining whether to waive, including the time elapsed since the distribution, inability to complete the rollover due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country, postal error, and errors committed by a financial institution (as we mentioned).
In this case, the taxpayerette withdrew from three IRAs maintained at a bank, with the intention of depositing the dough back into other IRAs which would produce a better rate of return. Indeed she did reinvest the dough – 68 days later, but her bank told her that it would not accept the redeposit as a rollover because the 60 day period had come and gone.
She sought relief from the Revenooers, who told her they were very sorry, but she wasn’t entitled to any relief at all – she just didn’t demonstrate that the bank had any duty whatsoever to inform her of the 60 day rollover requirement. The whole deal was within her control, and she just blew it.
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments at email@example.com, and invites readers to consider his other commentary at http://blog.nolo.com/taxes