We have this millionaire client at our firm. He’s a big fan of taxing millionaires at really high rates. Pretty outspoken on the matter too…and a little shady. We prepared his 2018 federal return (on extension) and e-filed it right before the deadline. He owed $175k. After we filed the return, and before he paid up, he received a lot of pressure, from the public, to put his money where his mouth is. The general argument leveled at him went something like this, “Hey, if you think millionaires should pay more in taxes, then just make a donation to the government!!!”
So, the guy writes a check to the “United States Treasury” as payee, for $175k. In the memo field of the check he writes, “Payment to the United States.” He holds up a $175k check at what amounts to a press conference, smiles at the camera, tells all the onlookers that he’s putting his money where his mouth is, and then he mails it in – to some P.O. Box in West Virginia that you use when making donations to the U.S. government. Shortly thereafter, he gets a tax notice from the IRS for the $175k he owes with his 2018 federal return. He brings the Notice to our firm and basically says, “I already paid it. I wrote a check to the government for $175k. You probably heard about it.” But like I said, he’s a little shady. So, we write a letter to the IRS explain the situation. IRS recently comes back to us and says he still owes the $175k.
I’m sure this situation is not unique. How have you guys handled similar things in your practices?