Let's face it; no one really likes opening bills. You tear open the envelope and see what the damage is. But chances are if you did just that and found a bill for 9 cents, you might be happy. But not one Northern Michigan farming family says it will cost them and you way too much to settle their debt with the state. The reason is the subject of this Fact Finder.
Mary Lyon and her family have strong ties to their Old Mission Peninsula home. Since 1876, the family has labored to grow cherries, apples, plums and peaches. As you might imagine growing that much fruit means that the Lyons need a few farm hands in the summer, and as an employer they also then need to pay the state for unemployment insurance for anyone they hire.
So Mary wasn't too surprised on a recent trip to her mailbox when she opened a letter from the State of Michigan Department of Energy, Labor, and Economic Growth Unemployment Insurance Agency. But when she sat down and opened it up, the surprise at what she owed the state kicked in.
As Mary describes it, "When I saw that 9 cents on there I thought should I send them a stamp but then I would have to pay another stamp anyway or should I send them 9 pennies or I wouldn't even know how to write a check for 9 cents. I don't think I have ever written one that small."
9 cents is what the Lyons owed! While they agree that's what's due, Mary wondered what is going to cost her to cover that bill.
She says "if I would have sent a check back it would have taken my stamp and then it goes to my bank. I would have to pay for them to make a copy of that check and send it back to me that would have been costly. Even the check itself cost a little fraction right?"
So if she paid it, Mary is out at least the 44 cents for a stamp to cover a 9 cent bill that's due next week. She didn't think that made a lot of sense, so she flipped the bill over to read all the fine print. On the back of the bill it clearly says that failure to pay could result in a 10% fine, no less than $5 but no more than $25. Mary wasn't too excited about wasting a stamp to pay a 9 cent bill, nor paying a $5 fine for not paying.
The entire situation didn't make a lot of sense to Mary, but what really got her going was that the state in her words wasted all of our taxpayer's money in the postage, paper, envelopes, and someone's time to process a bill for 9 cents! It left Mary wondering if this happened to her, "think of all the people in Michigan who have gotten a similar thing."
Mary was left scratching her head and described the entire situation as "it's weird, and do I dare say stupid, I tell my kids not to say that, but its stupid."
Whatever it is, someone has some explaining to do. So I asked the State's department that oversees unemployment insurance why was a bill sent out that would cost the state more than it would recover. Here's what their spokesman told me.
" UIA's computer system does not have a low tolerance threshold. In other words, the system does not prevent interest charges of less than $1.00 from being charged. The agency, however, is in the process of rewriting its unemployment tax system and plans on installing a low tolerance level, which would prevent tax billings below a certain dollar amount from being charged.
In a case like this, the employer can pay the balance owed (9 cents) with their quarterly UI tax payment for the 4th quarter which is due in January 2010. If they do not owe any UI taxes, then they can pay the balance with their 1st quarter UI tax payment due in April. The balance will remain and they can include it with their next quarterly UI tax payment. The agency does not expect the employer to make a special mailing to pay the nine cents in UI taxes."
So bottom line, Mary will not have to waste a stamp to mail this in. Instead she will cover the amount due on the next bill. She is still left wondering though how many other Michigan taxpayers receive similar letters just waste the stamp. If you follow the instructions on the bill, you are pretty much left thinking that is your only choice or risk facing a stiffer penalty. As for how many similar sized bills the state sends out each and everyday? That's a tough number to get a hold of. I called several other state billing departments who also do not have a "low tolerance threshold" computer system. They have not returned my calls with an actual number yet.
So what do you think? Please leave your thoughts below.
