$10 an Hour with Two Kids? The IRS Pounces
Rachel Porcaro knows she's hardly rich. When you're a single mom making 10 bucks an hour, you don't need government experts to tell you how broke you are.
But that's what happened. The government not only told Porcaro she was poor. They said she was too poor to make it in Seattle.
It all started a year ago, when Porcaro, a 32-year-old mom with two boys, was summoned to the Seattle office of the Internal Revenue Service (IRS). She had been flagged for an audit.
She couldn't believe it. She made $18,992 the previous year cutting hair at Supercuts. A few hundred of that she spent to have her taxes prepared by H&R Block.
"I asked the IRS lady straight upfront — 'I don't have anything, why are you auditing me?' " Porcaro recalled. "I said, 'Why me, when I don't own a home, a business, a car?' "
The answer stunned both Porcaro and the private tax specialist her dad had gotten to help her.
"They showed us a spreadsheet of incomes in the Seattle area," says Dante Driver, an accountant at Seattle's G.A. Michael and Co. "The auditor said, 'You made eighteen thousand, and our data show a family of three needs at least thirty-six thousand to get by in Seattle."
"They thought she must have unreported income. That she was hiding something. Basically they were auditing her for not making enough money."
She had a yearlong odyssey into the maw of the IRS. After being told she couldn't survive in Seattle on so little, she was notified her returns for both 2006 and 2007 had been found "deficient." She owed the government more than $16,000 — almost an entire year's pay.
She couldn't pay it. Her dad, Rob, has run a local painting business, Porcaro Power Painting, for 30 years. He asked his accountant, Driver, for help.
Rachel's returns weren't all that complicated. At issue, though, was that she and her two sons, ages 10 and 8, were all living at her parents' house in Rainier Beach (she pays $400 a month rent). So the IRS concluded she wasn't providing for her children and therefore couldn't claim them as dependents.
She stood to lose what is called earned income tax credit, a refund targeted to help low-income workers. You qualify only if you're working, as Rachel has been.
Driver quickly determined the IRS was wrong in how it was interpreting the tax laws. He sent in the necessary code citations and hoped that would be the end of it.
Instead, the IRS responded by launching an audit of Rachel's parents."
Thats the meat of it, although the full article has all the numbers (which are ridiculous). Why I'm posting this is a single quote from the end of the article however.
The money quote:
“We're an Italian family," [Rachel] said. "We're surviving as a tribe. It seems like we got punished for that"
Punished for being a tribe. Of course they are – The machine doesn't want tribes, anymore than it wants individuals. The mechanisms of the state are inherently suspicious of such resilient organization. Another hurdle that more of us will probably have to be prepared to deal with, as we continue to adapt, and lead our tribes into resilient behaviors.