I just had the most interesting conversation with the Tax Man. I am two years behind on filing my returns and the IRS is rightfully concerned. Almost all my income comes through Clarkson Energy Homes, Inc. (CEH) and passes to me as income. CEH is an S corporation which allows distribution of non social security income to me.

I was a little shocked when the Tax Man said he expected all income to be reported as W2 income. He said an officer of the company should be paid a salary and that he should receive W2 income. To hide my dismay and to avoid an argument I said, “I didn’t know that. I thought income could be passed to me through an S corporation without a need for W2 income. I guess I should speak with my accountant about this.”

He replied that without W2 earnings I would not be paying into Social Security or Medicare. I took a few deep breaths while looking at the phone receive like it was going to bite. Finally, I said “Oh that sounds bad.” I swear I kept the calm in my voice.

Why in the freaking hell would anyone find motivation from joining Social Security and Medicare? Yes, Mr. Tax Man I want to be a good little Socialist too. It’s my Patriotic Duty to follow every stupid lame government program that comes down the pike.

I have often read that you should only follow the written advice of IRS representatives. That oral advice should never be considered. This makes sense since you cannot blame the IRS for poor oral advice. But this a Revenue Officer. I would assume he had the first clue about how we use corporations to avoid taxes as much as possible. True, he probably assumed a late filer was not the most sophisticated tax dodger, but to suggest that all distributions be filed as W2 income. Oh Brother!