Hard to believe it’s already fall, and even though it doesn’t mean much here in Arizona (Mesquite trees don’t shed beautiful colored leaves on my driveway), it means that Halloween is also right around the corner. To bide the time until then, I thought I’d share a spooky story I dealt with this year related to the IRS, and how you might avoid being the protagonist in tales like this.
A married elderly couple client of ours (John and Sally, let’s say) filed their 2016 tax return in April, and expected a small refund. We asked them if they had made any quarterly payments, to which they replied “no.” Almost nothing about their return was different form years past. We even filed exactly one day later than last year’s taxes. Needless to say, this client was very routine, or so we thought.
After we all took our time away post deadline to recover, we returned to the inevitable IRS notices that show up. One that took me by surprise was for John and Sally. They were the model client – always got us their info on time, filed at the exact same time every year… what could have been the issue? Turns out the IRS suspected their identities had been stolen.
After talking with the IRS, it was determined that the client had forgotten they made an estimated payment and did not claim it on their tax return. In the IRS’s view, this was suspicious and thus, their account was flagged. “You made a payment,” they said, “Why would you not claim it? Someone else must have filed this return, because surely you would have remembered that check you wrote us.” These were all fair points; however, I am the first to admit that I forget things and can’t blame a client for forgetting either. We are all human after all…
The IRS usually will pull a return out of its identity theft procedures and “monitor the account” for nine weeks before issuing the refund, just to make sure that nothing fishy is going on and that the check falls into the right hands. Like a kid waiting for Christmas, an adult waiting nine weeks for a refund check is an absolute eternity, so remember all items of income, deduction and payment that can be easily verified by the IRS. It may save you some headache in the future.
Speaking of which, in today’s fast paced world, refunds don’t need to come by check. The IRS and state taxing authorities usually offer refunds by direct deposit. It’s safer, faster and a lot more convenient than receiving a check, so be sure to have your CPA load your bank info to your tax return. (And don’t give them a dirty look when they ask for all of your banking information. We’re doing it for your benefit!)
Brock Yates, CPA, MT