To the editor:
I have prepared income tax returns in this area as part of my profession for the last 36 years. I'd like to think I have a good reputation and rapport with all levels of government agencies. Or, at least I did, until now.
In the last few years, many village and city income tax departments have begun to require inclusion of the front page of the federal income tax return with the filing of their municipal returns.
It seems they are afraid of being cheated out of revenues, so this is an additional safeguard. Agree or disagree, this is the direction we are traveling today. Obviously, there are many items on the federal return which have absolutely no bearing on the computation, or verification, of the city return such as interest and dividends earned, pensions and IRA's, Social Security benefits, alimony paid, IRA contributions, unemployment benefits, etc. Since the vast majority of my clientele are very guarded with their privacy, particularly in small communities, we have always taken the step of blackening-out those items that do not pertain to computing, or verifying, municipal income tax. The cities are not being cheated in any way, and none have had a problem with this concept, until now.
In early February, one of my clients received a letter from Mr. Fred Pamer, administrator of the Salem City Income Tax Department. The letter said he needed a copy of the taxpayer's federal tax return "without everything blacked out." I contacted Mr. Pamer to point out that "everything" had not been "blacked out" and that all applicable lines were left unredacted. I also pointed out that Mr. Pamer has always accepted this practice in the past.
Mr. Pamer's response was that Salem City income tax law gives him the right to demand any information that is needed to verify the accuracy of the city return filed. To which I answered, that was exactly what I gave him. I asked Mr. Pamer to explain where my thinking was flawed and how a taxpayer's pension, Social Security, or interest earned was in any way essential in verifying the accuracy of a city income tax return. I was more than willing to listen to anything that proved me wrong. I received no further response, but what comeback was there? Other than "because I said so" there wasn't one. For two months, I assumed all was good, and I continued to process any Salem city returns in the same manner. Then came a letter from the Salem City Law Director, Mr. C. Brooke Zellers.
Mr. Zellers said he had been contacted by Mr. Pamer about my failure to comply with the Salem City tax code. I was told they believed my interpretation of the code Mr. Pamer had quoted me was mistaken. Amazingly, Mr. Zellers included this sentence in his letter: "Information which is lacking on the redacted forms pertinent to the verification of the accuracy of the local return and/or calculation of the tax due includes information that would appear on Lines 12,14,17,18, and 21."
I say "amazingly" because I have never filed a city income tax return with any of these lines redacted and Mr. Pamer knows that. Had Mr. Zellers bothered to talk to me first, I could have told him that. Of course, I doubt he is interested, as he declined to return the phone call I put in to his office. Instead, Mr. Zeller's letter gives me 10 days (dated the 14th, but not postmarked until the 17th) to amend all Salem City income tax returns I prepared this season. Or those taxpayers and I will be compelled to appear for questioning, under oath. Whatever that means in this case. I was also told that my clients would receive letters telling them that their returns were not properly prepared. Harassment?
It would be easy to just throw a copy of the 1040/1040A/1040EZ in with each city return. It actually takes some effort to properly redact those forms. The effort was made out of principle and in no way cheats any community or hinders the work of the income tax departments. Mr. Pamer knows this, and this is why he has not been able to give me a straight answer as to why this information is needed. Aside from a bit of slander, this is basically an irritating nuisance to me. To my clients it is an infringement on their privacy. Mr. Zellers told me the concern that my clients and I have for their privacy is unfounded. I would counter with the thought that a tax administrator who expends so much in city time and resources to gain access to personal information which is completely irrelevant to his work would be of great concern to me. As it should be to the fine citizens of Salem. I'm sure this letter will be paraphrased and recharacterized, but I stand by every word of it.