DUBLIN -- Apparently never before in California history has someone battled the state Franchise Tax Board to make sure his young grandchild didn't hold on to her first-ever tax refund.

But Hugh Sprunt, a retired certified public accountant in this East Bay burg, says he's not a bad grandpa -- just an honest one.

Sprung had been doing what thousands of grandparents do all over the country: legally funneling gift money into savings accounts for their grandchildren -- in this case his only grandchild, 2-year-old Rosa Sprunt.

But during the recent tax season, when the toddler's dividend and interest income exceeded $1,000, Rosa was required to file her first federal and state tax forms. And Grandpa -- also an attorney and tax gift expert who says he used to cater to "the 1 percent of the 1 percent" -- seemed like the logical choice for that task.

Rosa Sprunt, 2, got a $6 tax refund check from the state. But she wasn’t entitled to it, her grandfather told the Franchise Tax Board.
Rosa Sprunt, 2, got a $6 tax refund check from the state. But she wasn't entitled to it, her grandfather told the Franchise Tax Board. ( Courtesy of Hugh Sprunt )

Using TurboTax, Sprunt said, the federal tax return showed his granddaughter didn't owe the IRS anything and the government didn't owe her a refund. But the tax software informed Sprunt that Rosa owed California $6.

"I wrote the check, sent the return in on time and that was that," said Sprunt, also a famed conspiracy debunker who is considered an expert on the Vince-Foster-Bill-and-Hillary Clinton inquiry.

A few weeks later, however, the Franchise Tax Board mailed Rosa a check for $6, leading Sprunt to think he had made a mistake. But he was puzzled that no written explanation came with the check.

'Patriotic' call


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A former honcho with a giant international accounting firm, Sprunt holds a B.S. and an M.S. from the Massachusetts Institute of Technology, as well as an MBA and a law degree from Stanford. He is not a candidate for making mistakes.

So in a fit of curiosity and professional pride, he carefully crawled back through his granddaughter's paperwork -- and detected nothing wrong.

When he phoned the Franchise Tax Board, he asked a phone-bank representative to explain the $6 windfall.

Hugh Sprunt, an attorney and CPA, set the state of California straight when it mistakenly sent his 2-year-old granddaughter, Rosa, a $6 tax refund.
Hugh Sprunt, an attorney and CPA, set the state of California straight when it mistakenly sent his 2-year-old granddaughter, Rosa, a $6 tax refund. ( Courtesy of Hugh Sprunt )

"Several times he went off to talk to different supervisors," said Sprunt, who told the rep that Rosa couldn't claim an exemption for single filers because she is listed as a dependent on her parents' return.

Inspired by Sprunt's heroic effort over so little money, the rep at one point told him: "This is the most patriotic phone call I have ever gotten."

After a number of back-and-forths, including an admission by Sprunt that Rosa's folks had already cashed the government chit, the rep finally concluded that Sprunt was correct -- little Rosa owed the state.

The rep, Sprunt said, ultimately blamed a faulty government computer program for getting that cockamamie "exemption" wrong.

"Tell your kid we want our $6 back," the rep joked at the end of the call.

Because tens of thousands of California grandparents and other benevolent adults give money to minors, Sprunt wondered if the computer glitch might have resulted in a crazed state bureaucracy sending out mistaken refunds to grinning youngsters all over California.

John Barrett, a spokesman for the Franchise Tax Board, inquired into that scenario, but concluded in an email to this newspaper: "There was a keying error during processing that allowed the dependent to be claimed, which resulted in a refund. This was an isolated incident."

No more checks

Grandpa Sprunt got a more exhaustive explanation by phone of precisely what happened: Part of the paper return was bent or otherwise damaged and could not be scanned automatically. So it was sent to a keypunch operator, who missed an "X" in one box and in another turned a 0 into a 1.

Sprunt also asked why Rosa didn't get a written explanation from the state when she got her refund check. Sprunt said he was told the state sends an explanation only when it's asking for more money.

He said he was told: "People usually don't ask what a refund is for, so no explanation is separately sent."

When Franchise Tax Board spokeswoman Denise Azimi was asked if she knew of any other taxpayers who made such an effort to be correct over so little money.

"I cannot say for certain how many people would work as hard as Mr. Sprunt," she replied, "but his knowledge of taxes and his determination to set the record straight are truly admirable."

Contact David E. Early at (408) 920-5836.