If you want to avoid an IRS headache when you need to make an estimated tax payment, take heed.
Last week, a client told me his saga about tracking down the whereabouts of his payment to the Internal Revenue Service (IRS), then disputing two delinquency letters he received from them. He estimated he’d spent nearly 12 hours dealing with his IRS issue. And, unfortunately, it wasn’t yet resolved.
He mailed his check and accompanying voucher in October. When his check to the IRS had not cleared his bank account, he took it upon himself to call them and request they track it down. Was this phone call necessary? No, but he feared that if he wasn’t proactive, the IRS might penalize him for late or lack of payment – even though it was either the United States Postal Service (USPS) or IRS that lost the check.
He was told that the mail has been sitting in trucks for weeks, so it would eventually get processed. “We’ll put a note in your file that you called,” he was told.
In December he received a delinquency letter from the IRS. He called again and was told to disregard it since he said he’d mailed it.
He received a second delinquency letter in January, even though the check had cleared his account shortly after the first letter was received. This time when he called, he was told that payments must be received by the IRS by the due date, so he was delinquent. When he tried to explain that the rule has ALWAYS been that it must be postmarked by the due date, he was told he was incorrect. He was also informed that the IRS had not yet received his payment.
As of this writing, his issue has not been resolved.
All of his problems – aside from having the good luck of speaking with IRS employees who are not well-informed – stem from the fact that he had no proof of when he mailed his estimated tax payment, nor proof that it was delivered to the IRS.
To avoid these types of headaches, stress and loss of time, use one of the following two options to make your payments to the IRS:
The IRS offers online payment options. Save a record of your online receipt so you have proof of the payment amount and date. You’ll also have a record through your bank of when you made the payment. Note: Make sure you link directly from the IRS website to avoid malicious websites that pop up during Google searches. Also be sure to make your payment from a secure internet connection and not public Wi-Fi. If you want to be extra cautious, establish an account that’s only used for electronic transactions. You only put money in it when you make a payment, and you can receive money, then immediately transfer it. Just in case your account information is pilfered during the online payment process, you won’t lose your entire savings.
For more details about paying the IRS electronically, visit the IRS Payments page here. (Yes, this link is the legitimate IRS website! Look for irs.gov in the domain name.)
Snail Mail with Proof of Delivery
If you do not feel comfortable paying online, you can use the good old fashioned USPS or other delivery service. FedEx, UPS, DHL and most other couriers offer proof of delivery as a part of their fee. The USPS does not. You need to specifically request this service and pay the additional charge, which currently starts at $4 for a Certified Mail Receipt. For details about mailing options, visit the USPS Tax Return page here.
The next estimated tax payment deadline is January. For other dates, visit the IRS Estimated Tax Payment page here.