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Chasing pennies with dollars

April 21, 2011

Back in blogging action after another season of preparing hand-crafted tax returns, Robert D Flach thinks I am encouraging taxpayers to squander their money by telling them to get a return receipt when they file using certified mail:

But the extra you spend to get a return receipt is a total waste of money. It means absolutely nothing – only that the IRS received an envelope from you that was postmarked on April 18th. It doesn't hurt to do this (except your wallet) - but it really doesn't help either.

But showing that the taxing agency did receive an envelope from the taxpayer shows that the taxpayer sent them an envelope. A client made a filing with a state. The state sent him a notice much later saying that not only was the return late, but that he had never filed one. Unfortunately, he did not ask for the return receipt. He has the postmarked certified mail stub, but now he has to battle with the state over whether the postmarked envelope was even sent to them. The time spent on that already would have paid for the return receipt many times over.

UPDATE, 4/22:
Russ Fox has more examples of the usefulness of certified mail.

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Comments

Agree wholeheartedly on the receipt thing, especially if you owe. My SIL's return was on a mail truck that got in a big accident a few years ago. The large number of returns were destroyed in ensuing fire & she was able to provide proof of filing because of the return receipt.

BTW - I rarely comment but regularly read your blog. Thanks for the great info you provide.

JK-

If you are going to waste your money on certified mail you should definitely pay the extra small amount for return receipt. I just personally think it is a waste of money to send a tax return certified - especially if you have to stand on line for close to an hour to do so.

The best idea is not to wait until the last day to get your return, or your extension application, in the mail.

In 40 tax seasons I have never sent a return, or correspondence, to the IRS or a state via certified mail and I have never had a problem.

TWTP

In my second tax season I saved a client late penalties on a $300K balance due -- and not coincidentally, my job -- by using certified mail. As staff accountant, I was sent to deliver the return, obtain the signatures, and file it. The IRS said the return was filed late. My receipt convinced the IRS otherwise, saved the client the late penalties, and saved my career.

Certified has saved other clients since. When it matters, I'm not willing to count on the efficiency of the postal service or the kindness of the IRS.

If you don't pay for a receipt when you send certified mail you can get a copy of what the recipient signed, it just costs about five times what the receipt would cost. If you send a lot of certified mail, it is more cost effective to pay a high price once in a while than a low price every time. IRS regularily sends masses of certified mail with no return receipt requested.

Thanks Michael, that's what I thought. The USPS website says "A Return Receipt may be purchased before or after the mailing."

"A Return Receipt after Mailing (a.k.a. a Duplicate Return Receipt) provides the sender with a return receipt showing the date of delivery and the name of the person or organization that received the item but does not provide an actual signature. Duplicate return receipts are accepted by the courts and other authorities as proof that the article was delivered, and carry the same weight as an original return receipt."

You just have to fill out a PS 3811-A and pay $5 or so.

So why spend the money now for a return receipt, if you can get one for about 5 times as much when and if you actually need it? The IRS would have to lose 20% of its mail for that to be worth it, and in my experience it's much much less common than that - closer to 1%.

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