The Observation Deck

Declaration of Exemption….

Today my 19-year-old daughter got a Delinquent Filing Notice from the City of Lakewood. The notice asserted that she had failed to either (1) file an Individual Income Tax Return, or (2) file a Declaration of Exemption detailing why she had failed to file an Individual Income Tax Return. The Lakewood notice stated that “Failure to complete and mail this form (prior to June 20) will result in an Administrative Subpoena for your appearance at the City of Lakewood Income Tax Division.”

I’m pretty smart but I never realized that there was an Exemption requirement. Neither did my accountant. There were several options one could choose as to why one failed to comply with this requirement. One option, the one that applies to my daughter, option Number 9, is that “No wages, salary, 1099 miscellaneous business or rental income for all of the above mentioned years.” Which is the case for my daughter. But according to the form, in order to establish option Number 9, you have to submit the “page 1 of your Federal Form 1040.” But the fact is that if you don’t have any Federal taxable income, you are not required to submit a Federal 1040! So does she (I) have to unnecessarily file a Federal tax return for $0 in income in order to comply with Lakewood tax requirements?

My 19-year-old daughter is on the radar because she made a few hundred bucks as a lifeguard in 2012, for which she dutifully paid Lakewood city income taxes, or she would not be on the radar. Maybe $750 in 2012 income and $20 in taxes. But not in 2013. Nothing. Or she/I would have reported it.

There is something terribly wrong when a kid who really has no background in tax bullying gets hung up in nickel/dime stuff and has to rely on her dad. This is so wrong. I am not really interested in her being subject to government subpoena for maybe $20….

Tim

By the way for what it's worth it's it was also demanded of me by the City of Lakewood that I provide all my Schedule K-1's as they were reported to the Federal government. Which a couple weeks ago I did, even though are a part of my Federal tax return. So who knows what's up....

As a small business owner I am pretty used to being harassed. The Department of Labor very recently finished a month-long (honestly) audit of my company (health insurance and 401k) that resulted in a (gasp!) $750 fine. I figure between me and the auditor it was a couple months. For $750....

It has nothing to do about my business. It's about keeping the bureaucrats busy.....

Back in the 1990s, I knew a lot of twentysomethings that lived in Lakewood apartments. (I was one of them)

Many of them never paid any income tax, thereby freeloading on the city.
The RITA system of that era never tracked their payments or whereabouts.

I hope this anecdote is an indication that the in-house Lakewood Tax Department is much more on the ball.

My recollection is that once you have filed your first return, they send you a letter each year reminding you that you have to file a return or file a declaration of exemption. Didn't your daughter get such a letter?

And I'm pretty sure IRS, a federal agency, does not release anything from your return to the state or the city, which would explain why the city wants copies of the schedules you filed with another agency.

It doesn't sound like you or your daughter is getting picked on.