Friday, August 2, 2013

Why Computers Fail

Sometimes we forget computers are designed, produced, programmed and used by people, so we assume they're correct if not infallable, but they're neither when they're misprogrammed and misused. A case in point is a recent audit I had by the IRS.

Yeah, we all know how much they're loved and more so hated. When I retired on December 31, 2005, from January 1, 2006 to today I've lived on my federal employee annuity, and as much as they promised, until it became political fodder no thanks to President Obama.

This is because the federal employees trust fund is solvent, even far more than the Social Security trust fund. It's because it's paid by the employees and their respective agencies, and over 30 years, employees contribute a fair share to this fund.

And as such it's not really effected by the annual budget except that of the number of active employees as the agencies and employees contribute to the trust fund which is quite substantial today and will be for decades.

The only thing Congress decides is the annual increase for the cost of living. But in 2009 President Obama for political purposes froze the 2010 and 2011 annuity at the 2009 level so that Congress couldn't make it a political issue.

Well, imagine freezing your income for three years while everything else around you increases. I estimate I've lost $250-300 net monthly income over the years since because when the first increase didn't occur until 2012 it was based on the 2009 level annuities and not what would have been by 2011 if it wasn't frozen.

Anyway, that's not the point here, just one I like to make so people can't blame active and retired federal employees for the deficit and debt. We're not a part of it. My point is that when you retire the government, namely Office of Personnel Management (OPM) pays your annuity.

Your annuity is based on a formula of the last 3 years of your salary and the number of years of service and then only increases at the whim of the President and Congress to agree on the percentage, which is why President stupidily froze it for no reason.

During your retirement your annuity comes from your contribution and the trust fund. This is reported on your W-2 statement and "Gross Income" and "Taxable Income" because you've already paid taxes on the portion of your annuity from your salary contribution, and can't be taxed again.

It's the "Taxable Income" I've reported on my 1040EZ form from 2006 through 2012. The IRS in their infinite computer wisdom does random audit comparing the "Gross Income" on W-2 statement with the reported income on your 1040.

See the obvious? They're different. They're supposed to be different because you only report your "Taxable Income" on the 1040. Well, in early June I got a letter from the IRS saying I owed taxes on the difference for my 2011 income on the 1040, based on their computer audit.

Well, I filed an appeal in mid-June and didn't hear anything from them until a week ago when the letter said I'd hear from them within 60 days. Today I got that letter. Really, it took an auditor about 5 minutes to see the error.

The letter said I owed $0.00 and the matter is considered resolved and the case closed. In short, I won and their computer is too stupid to check two boxes on the database for the two incomes. I wonder how many people have suffered their stupid audit to be stressed about something they didn't cause or do anything wrong.

And the IRS wonders why they're hated so much. A person seeing the audit originally would have seen and stopped this. Why didn't they? They just spit out computer results assuming they're right? Ok, some  people will fudge but I didn't and followed the rules.

And for nearly two months I worried about the IRS and will every year I file now to worry if I'm caught again in the same stupid audit, one easily fixed by computers and people. And it's why computers fail.

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