The IRS wants taxpayers to be responsible, diligent, and punctual. Similarly, Amazon has grown as a company by building up its reputation with reliable delivery times. Many taxpayers could learn from Amazon when it comes to fulfilling tax responsibilities in a timely manner. If you owe money to the IRS, only you are responsible for making sure they receive timely payment.
Be Careful When Sending Returns/Extensions with Payment to the IRS:
If you think it’s hot in Texas, wait until the IRS comes along. In a recent case, a Texas man learned this the hard way. He slipped a check for $46,073 owed to the IRS “under the mat at the front door” of his former wife’s residence, with the understanding that she would file an extension along with the check, The pair had continued to file their tax returns jointly since their separation in 2007. The IRS neither received the check nor the extension because the wife never sent it out. As a result, the IRS issued a notice of deficiency and tacked on penalties for the couple’s failure to file and pay. James Plato, TC Memo 2018-7 (Tax Ct.); In re “Penalties – Estranged Husband Didn’t Exercise Reasonable Care in Filing Joint Return” Thompson Reuters Tax & Accounting, Practitioner’s Tax Action Bulletins No. 2018-03/Page 3.
The taxpayer decided to go to Tax Court to challenge the penalties that the IRS had issued against him. The Texas man argued that his failure to meet the deadlines was NOT willful, citing his history of tax compliance and efforts to pay the amount owed. The Tax Court disagreed and ruled against the taxpayer because he failed to “do everything possible to see that (the) return was filed.”
In re “Penalties – Reuters Tax & Accounting, Practitioner’s Tax Action Bulletins No. 2018-03/Page 3; Plato, 2018-7 (Tax Ct.).
Act Early to Avoid Additional Tax Liability:
The IRS Tax Code imposes a hefty minimum 0.5% penalty per month for taxpayers that fail to pay their tax liability in a timely manner, I.R.C. 6651(a)(1)/(2). This penalty could increase to 25% if the liability is not paid within 4 months of the deadline. Taxpayers are best advised to not rely on others to fulfill their tax obligations, especially estranged spouses.
If you have neglected your tax liability by failing to pay amounts owed or failing to file your return, address these problems before the IRS decides to enforce the amounts owed. My law firm has specialized in helping clients successfully challenge tax liability owed to the IRS for over twenty years. For many taxpayers, penalties and interest accrued can successfully be challenged against the government. If you have unfiled returns or owe money to the IRS, schedule a free thirty-minute consultation at my office to resolve your tax problems. Call us at (212) 387-7880 or email us at daniel@dmsilverlaw.com.