Monday we received a thick letter from IRS (国税局）. It says according to the information they have we didn't report $XXX,000 income in 2005 therefore owing tax and interests more than $X0,000. That was a shock!
In 2005, we sold some stock options and got a small windfall of extra money. The net income of these ISO options or short term ESPP sales are all reported on our W2s. However, the financial institutions managing our stock options are required to send gross amount of the sales to IRS as I-1099. Then the stupid IRS doesn't even check the W2 income statement (it includes net income of both ISO stock option and ESPP) before send us this harassment letter. We have to spend two evenings to look up our past tax files to figure out their problem, plus all the frustration caused by them!
After we confirmed that we did everything properly and paid all the tax, LD 筒子called them this morning. As soon as they looked at our W2s, they said "You are right. We'll send you a confirmation letter in 5 weeks." That's it?
Yeah, THAT'S IT! No appology offered.
筒子们啊，watching out for IRS!