Once upon a time, early in his career, a young staff accountant was selected by his supervisors to deliver a return to a client on April 15. The client, a gruff sort, owed around $300,000 on the return, which probably explains why the supervisors chose not to deliver it themselves.
After getting the client's signature, the staff accountant took the return to the post office and mailed it, along with the biggest check he'd ever seen, to the IRS. Just to be safe, the staff accountant mailed the return "certified mail, return receipt requested," and saved the postmark.
Three weeks later the client sent the staff accountant a nice letter he'd received from the IRS. The IRS politely said, in effect, "hey, your return was late, buddy, you owe us $15,000 in late filing penalties." His heart was racing as he got the file from the file room, all the while wondering "did I really get a postmark? Did I put it in the file?" Happily for all, the postmarked reciept was safe and intact.
The $4.05 or so extra spent by the young accountant on certified mail saved the client $15,000, in addition to saving the young accountant's job. The young accountant also learned a valuable lesson: a certified mail postmark is to the IRS what a crucifix is to a vampire — it wards them off every time.
MAKING SURE THE RETURN OR EXTENSION IS TIMELY-FILED
Technology has changed, so there are other options to make sure your return is filed on time.
Electronic filing is the most reliable way to make sure a return or extension is filed on time. If a return is e-filed, the e-file provider gets a confirmation of the acceptance of the return from the IRS that is conclusive proof of filing. If you have a balance due return, electronic filing with direct debit from your bank account is the best assurance that you meet the April 15 filing deadline - as long as you make sure you have funds in the account to cover the payment!
Certified Mail, return receipt requested still works like a charm. If you file a paper return, you take your return to the post office, complete the return receipt, and save the postmark in a safe place. Certified mail receipts have proven time and again to ward off late-filing assertions from the IRS.
You can also use a certified mail receipt in conjunction with e-filing; if you efile your return, but choose not to have the balance due electronically paid from your bank account, you should send the check with the Form 1040-V payment voucher via certified mail.
Private delivery services. The tax law now recognizes dated shipping receipts from some private delivery services as the equivalent of a certified mail receipt. The IRS has a list of private services whose shipping receipts are recognized as evidence of timely filing (Notice 2002-62).
Dropping your return in the bin held by the guy at the 2nd Avenue post office at 11:55 p.m. on April 15 is as absolutely, positively reliable as the postal service is generally. Assuming, of course, that the guy with the bin is really a postal employee.
OTHER APRIL 15 DEADLINES
The IRS helpfully reminds us (IR 2003-50) that April 15 is also the due date for
-Participation in the Offshore Voluntary Compliance Initiative (OVCI), the program to let users of offshore tax shelters to come clean without criminal penalties.
-IRA contributions for 2002.
The items included in the Tax Update Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation.
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to