Hugh Sprunt, a retired CPA and tax expert for an international accounting firm, is in the news for strong-arming California State into taking back a $6 tax refund the State issued erroneously to his two-year granddaughter.
Sprunt had been building up a savings account for little Rosa, and during this tax season, the interest income and dividend in the account exceeded $1,000. That means Rosa was required to file state and federal returns for the first time in her life.
According to the San Jose Mercury News, Sprunt used TurboTax tax software to do the tax returns for his granddaughter as a dependent on her parents’ returns. The software showed that Rosa did not owe any federal taxes, and neither did the IRS owe her a refund.
But TurboTax did show that Rosa was supposed to pay $6 in state taxes. So Sprunt filed the returns and mailed the $6 check, and that should have taken care of little Rosa’s tax issues for the year.
But then, the California Franchise Tax Board unexpectedly sent Rosa a $6 refund. Thinking that maybe he had made a mistake, Sprunt went through everything all over again. He found nothing wrong in the paperwork or the software, which still showed that Rosa was supposed to pay $6 to the State of California.
So he called the Tax Board, and his call stirred up quite a bit of action. After many consultations with supervisors, the rep on the phone finally admitted that they had screwed up.
The government’s software had given Rosa an exemption as a single filer, which she was not entitled to as a dependent on her parents’ returns.
The rep told Sprunt this was the most patriotic call he had ever taken, and demanded that little Rosa hand over the $6 she owed the State.
The Franchise Tax Board then checked their records to make sure that kids all over the Golden State were not spending tax refunds they had gotten by mistake.
Turns out this was an isolated case because Rosa’s paper return was bent and could not be scanned. A manual operator had then made a mistake while punching it in.
Photo credit - efile989