Dad Joke
Why did the scarecrow win an award?
Because he was outstanding in his field.
Now Let’s Make Your Money Smile
You can stop an IRS interview cold — even after you’ve started answering
Two IRS items this week, and I’ll tell you why. Wednesday I wrote about penalty abatement being a free phone call. This week the IRS’s own watchdog put out two reports, and one of them is about a right that I’d bet almost nobody reading this knows they have.
Here it is. If you are ever sitting in an interview with an IRS officer — an audit, a collection interview, in person — and you say clearly that you want to talk to an attorney, a CPA, or an enrolled agent, that officer has to stop the interview. Not “should.” The statute says shall suspend.
And here’s the part that surprises people. The law says they have to stop regardless of whether you have already answered one or more questions. That’s the actual language. Most people assume that once they’ve started talking, the moment has passed and it would look bad to stop now. It hasn’t, and it doesn’t. You can be forty minutes and a dozen answers into a conversation and still say the words.
You can also record it. Same statute: on advance request, at your own expense, with your own equipment, they have to let you make an audio recording of an in-person interview about determining or collecting tax. Nobody advertises that either.
I’ve sat in that chair. My own audit was so unfun that what I remember isn’t my own paperwork — it’s the person in the next cubicle, also being audited, in a wheelchair, and crying. That’s the room. It is intimidating and it is scary, and that feeling is exactly why people answer questions they were never required to answer that day. Mine happened to end with me getting more money back, which seems about as unheard of as winning the lottery and is not something I’d plan on. But I’d rather you walk in knowing what the room feels like — and knowing the one sentence that lets you stop it.
Why this is news and not just trivia: the Treasury Inspector General for Tax Administration — the IRS’s independent watchdog — issued its annual statutory review on August 31 and announced it Thursday. It found the agency “lacks a system to identify potential violations” of that very rule. Their sample found collection staff largely complied, but interviews with managers and employees turned up “inconsistent understanding” of several procedures — including the taxpayers’ right to record. So the rule is real, and the people applying it are not uniformly clear on it. That is exactly the situation where knowing the sentence yourself is worth something.
One honest limit: it doesn’t apply to an interview the IRS opened with an administrative summons. Everything else, it does.
If someone you know is dealing with the IRS right now, send them this one. People walk into those interviews alone because they think asking for a representative makes them look guilty, and they answer questions they didn’t have to answer that day. It’s one sentence, and they are allowed to say it after they’ve already started.
If you can’t pay, file anyway — not filing costs about ten times more
This is the one that costs people real money, and it’s backwards from what almost everyone does.
When you can’t pay a tax bill, the instinct is to not file. It feels like the same problem either way, and filing feels like raising your hand. So the return doesn’t go in.
Look at the actual arithmetic. The IRS charges a failure-to-file penalty of 5% of the tax due for each month or partial month the return is late, up to 25%. The failure-to-pay penalty is 0.5% a month. Same bill, same month, ten times the price for the missing paperwork rather than the missing money.
On $10,000 of tax, five months late: filing late and paying late runs you the full 25% file penalty in five months. Filing on time and simply not paying, over that same stretch, is a fraction of it. You do not have to have the money to file. Those are two separate obligations and only one of them requires a bank balance.
The reason it’s live right now: the same watchdog’s second report, also dated August 31 and announced Thursday, found that nearly 33,700 taxpayers had been sitting in “first notice status” more than a year into the IRS’s high-income nonfiler push — parked, with no further collection action. After TIGTA raised it, the IRS moved those cases out of that status in March. Roughly 11,000 more sat unworked in the queue. Translation: the pause a lot of nonfilers have been quietly enjoying is being cleaned up, and the cheapest day to file a late return is always the day before somebody comes looking.
Disaster giving season, and the people waiting for it
The FTC’s Military Consumer team put out a reminder this week that’s worth thirty seconds: after a hurricane, a flood, an earthquake, fake charities move fast, because they know that’s when people give without checking.
The check is easy. Give to an organization you already know by name, go to its website yourself rather than through a link in a text or a social post, and never send disaster money by gift card or wire. If someone is pressuring you to give right now, that pressure is the product.
Money you might actually be owed this month
September’s claim windows are open, and nobody is going to email you about them. Two worth a look:
A word on how to read these, because the headline number is the most misleading part. A $1.01 million settlement sounds like a lot until you divide it by the class. Most of these pay out in the tens of dollars, and the honest reason to file is that it takes four minutes and the money is already set aside — not because it’s going to change your month. Check whether you’re actually in the class before you spend any time on it. Half the “you may be owed money” traffic online is people harvesting your details for a claim you were never eligible for.
The number underneath all of this
In the three days from Tuesday to today, at least 65 new federal cases were filed against the three big credit bureaus — Equifax, Experian and TransUnion. I say at least and I mean it twice over: the docket system I read is federal only, so state court cases are invisible to me, and federal indexing runs a week or two behind, so the number moves after the fact.
I don’t lead with that number, because a count isn’t a story. But it is the honest backdrop. People sue the bureaus constantly, mostly over information that is wrong and stayed wrong after being disputed. If you’ve disputed something and been told it was “verified,” you are not an unusual case.
What I published
I’m Being Evicted and Debt Collectors Are After Me at the Same Time. Here’s What I’d Do First.
Mortgage Rates Just Hit a One-Year High — and the Fed Isn’t Talking About Cuts
On the podcast this week
Should You Stop Paying Credit Cards? — Why Banks Won’t Help Until You’re Behind
It’s the question I get more than almost any other, and the answer is genuinely uncomfortable: the system mostly doesn’t offer you anything until you’re already behind. I talk about what that means for deciding when — and whether — to stop.
For the deeper dives — company reviews, full case breakdowns, the stuff that needs more than a paragraph — that’s what the Weekday Briefing is for. This one’s the quick version, every day. If today’s issue was useful, pass it along.
Nothing here is legal advice, and I’m not your lawyer or your financial advisor. These are filings and allegations, not findings — read “alleges” as exactly that. Talk to someone qualified before you act on anything specific to your situation.
Here’s what I keep coming back to after thirty years of this. The people who get out are almost never the ones who found some clever move nobody else knew. They’re the ones who stopped looking away from it. One statute you didn’t know about, one return you finally filed, one question you asked out loud instead of carrying around — that’s what the road out is actually made of. It’s not dramatic and it works. Have a good weekend, and I’ll see you Monday.
— Steve
Bonus Section
A few places I actually use, and what I get out of telling you. Each one shows a plain link and my referral link. If you use mine, the company may hand us both a small bonus. The plain link goes to exactly the same place — it just pays me nothing, and you nothing. Use whichever you like; genuinely, it’s your call.
I’ve also listed places I like that pay me nothing at all, so you can see the difference.
Cash that actually earns something
Betterment — their Cash Reserve account is the closest thing here to a plain high-yield savings account. (my referral link)
Robinhood’s cash sweep pays competitively too. The good rate sits behind their paid Gold tier — I pay for it myself — so on a small balance the subscription can eat the gain. It’s under Investing below. Do the arithmetic before you subscribe.
And one where nobody pays anybody: TreasuryDirect is the government’s own site. You buy Treasury bills straight from the Treasury with no broker in the middle — $100 minimum, in $100 increments, terms from four weeks out to a year. There is no app, no bonus and no referral link in existence for it. I mention it because for money you know you won’t touch for a few months, it’s usually the honest number the others have to beat.
Saving without having to think about it
Acorns — rounds up your spare change and invests it automatically. I pay for it, and the reason is simple: it saves money I’d otherwise spend without noticing. (my referral link)
And the version that costs nobody anything, me included: a standing transfer out of checking on payday, at the bank you already have. Acorns works because it moves the money before you notice it; a transfer you set once and forget does the same thing. If you’d rather not open another account, do that instead — I’d genuinely rather you saved something than used my link.
Investing
Robinhood — the platform I run my own experiment on. Uninvested cash is swept to FDIC-insured program banks, so it doubles as a cash account. The competitive rate requires their paid Gold subscription, which I pay for myself — worth it at my balance, but do the arithmetic on yours. And note Robinhood doesn’t pay that interest itself; the program banks do. (my referral link)
And three I recommend on merit, where I get nothing at all: Vanguard for low-cost index funds, Schwab for a full-service brokerage, and American Century — I was a happy customer there for decades.
Rates and terms move, and each of these has its own conditions. Go look at today’s numbers before you move a dollar.
A free conversation about your situation
Damon Day is an independent debt coach, and my co-host on Get Out of Debt Guy — you can also hear us on Spotify. I want you to know that before you decide anything. I receive no payment for this referral.
The consultation is free. The only time money changes hands is if you decide you want to hire him as a consultant. Go to DamonDay.com and schedule — he doesn’t cold-call anybody, and neither do I.
Or ask me, anonymously
Ask Steve — free, private, and I’m not selling anything. No account, no email, no sales pitch at the end of it.