True Confessions

[mcb39]

Client left message Mon that he is still waiting for his refund. I did a check on IRS and WI sites. No info available. I suddenly remembered that I was waiting to find out if he wanted DD or paper check as he is an OTR driver. He picked up his papers, paid me and I just totally never remembered to send the e-file. Filed it yesterday and received ACK today. I told him that the lady told me to refile it. Of course, I was the lady who told me that, but he bought it and thanked me for the help. Does this mean I should hang it up or should I finish the extensions that are still piled on my floor.

Can we expect a penalty for late filing? Of course, I would pay it if there is one. If I plead "stimulus insanity"; will they forgive it? Just remember, I didn't have to tell this story.

[JohnH]

You're OK with the IRS. No penalty for late filing if there's a refund. Of course if he later gets audited and it turns out that he owed at the filing date, there would be a penalty assessed at that time. I don't know about WI.

[mcb39]

You're OK with the IRS. No penalty for late filing if there's a refund. Of course if he later gets audited and it turns out that he owed at the filing date, there would be a penalty assessed at that time. I don't know about WI.

There is probably little or no danger of him owing at any future date. Both of his refunds are decent and it is a clean return. Thanks for your reply, John.......

[Julie]

I had one like that this year too. Settled it about three weeks ago. I'm glad I wasn't the only one.

Client left message Mon that he is still waiting for his refund. I did a check on IRS and WI sites. No info available. I suddenly remembered that I was waiting to find out if he wanted DD or paper check as he is an OTR driver. He picked up his papers, paid me and I just totally never remembered to send the e-file. Filed it yesterday and received ACK today. I told him that the lady told me to refile it. Of course, I was the lady who told me that, but he bought it and thanked me for the help. Does this mean I should hang it up or should I finish the extensions that are still piled on my floor.

Can we expect a penalty for late filing? Of course, I would pay it if there is one. If I plead "stimulus insanity"; will they forgive it? Just remember, I didn't have to tell this story.

[JohnH]

Since we're in confession mode and it's fresh on my mind, I'll add that I wrote a check to a client yesterday for $ 142 to pay 2/3 of the interest assessed on a 2006 return. I made an error and it cost them money when it was discovered, so it was the only right thing to do. We all make mistakes - some cost more than others.

[mcb39]

All of your replies are so interesting. Now I know that I don't have to plead the fifth or give up tax prep for at least another year. I've done other stupid things too; but this one was probably the worst. Thanks to Julie and John for also sharing.

[Lion EA]

Well, I'm still filing returns on extension. On extension due to my slow speed this first year on my own with new software. Extensions that I thought would be done in May and June, turning into July and August (I have an assistant doing some data entry, but she's been out for months with a teen with cancer surgery). Extensions for people who'd never filed extensions and were worried about penalties and interest. Some traditionally had refunds. But, not this year! The $33,000 in 2006 alimony was an increased $55,000 in 2007. Or, the ones that came in much too late -- about 20 in a five-day period in April -- to even estimate very close to if/what they might owe. Did round numbers estimate on one: looked like over 90% of liability was covered by withholding, but only federal was over 90%; state was only 89.3% These are high earners (most of my clients, and especially the ones late in getting their K-1s, brokerage statements, etc., to me), so that extra 0.7% cost hundreds in P&I. In the ones I'm preparing now that owe, the P&I is hundreds of dollars, even more than their tax prep fees. Do I offer to cut them a check? Free prep next year? I'll be paying out more than I'm taking in. The 89.3%-er was aghast over the telephone, but very nice when she came in to pick up. But, I won't have the same luck calming some others that owe. Any one else been in this position this late in the summer with people who don't usually file extensions but you talked them into it one year due to your circumstances?

[mdmcfarland]

I had a similar instance this year also. Client called and wondered why he hadn't received his refund. When I checked, I found his file in the drawer. I was waiting for his signed 8879.

When I explained this to him, I got the 8879 signed and e-filed. Got ack the next day. I'm so glad to find out that I'm not the only forgetful one.

[JohnH]

Lion

Absolutely no.

I would never pay P&I on a client who gets info to me at the last minute and we have to file an extension & then find out later there was "more to the story". That's a totally different animal. Extensions are a result of their not planning far enough in advance to give you time to do the return, so they just need to live with the result as a cost of the convenience of doing things at the last minute. I've had THAT conversation with a few clients over the years, and my answer is always the same - if it's so important to you then we should have been talking about this back in February.

In the rare case in which I should have known about something that was clearly visible or was on a prior year's return and I missed it when filing the extension I might make an exception, but that would be rare indeed. I also had a guy one year who quibbled over the June & July P&I - he said I should have been able to get the return done in May even with the extension. I told him to pay up & forget it - my schedule is still up to me and he always had the option to take it to HR or JH & sit in their waiting room for a few hours. Apparently he thought his time was more valuable than that and I agreed with him - so is mine.

Anyhow, the P&I for FTP isn't such a big deal even when the extension payment is low. It totals about 1-1/4% per month on the unpaid balance, so why should they get upset? If it's really important to them they can start planning in Feb. And if the amount is so high that it becomes significant in absolute dollars, then maybe they need to invest in a little tax planning during the year when all that big income is rolling in rather than toss it on our desk in April & expect a magic wand to appear.

One point about extensions - I always file them, even for clients who apparently have refunds. Don't want to be caught by surprise with a 5% per month FTF penalty when all it takes is a simple piece of paper to completely avoid it.

Sorry for the rant. I'm a big fan of extensions because it stretches out the work, but I also believe it's important to train the clients.

[zeke]

>>Just remember, I didn't have to tell this story.<<

I suspect that many of us are bettter informed as to P/I due to greater experience!

Except for Jainen with his superb memory. He probably remembers the date on the first dime the tooth fairy left him!

[MAMalody]

In regards to extensions, my engagement letter indicates that, at my discretion, I will automatically file for extensions unless instructed not to in writing. Come 1 April, all returns remaining get an extension. On the 7th I send the 9325 acknowledging the extension to all returns that have not been filed. Works for me.

[Lion EA]

Thank you everyone. You've all been very helpful. Yes, I do/did file extensions for everyone who might not get done. CT has a nasty 10% right off the bat for underpayment plus interest, etc. Ouch. So, I was trying to finish those that owe ahead of those that don't. But, peoples lives change; and it's not always clear from a quick estimate for extension purposes when we're already sleep-deprived in April. Oh well. If they're grouchy, they can go elsewhere next year. I have enough clients and have been getting more through referrals. So, I need to stop worrying. (One client even told me to take care of the cranky clients first; she'd be glad to wait for me!) Thank you again for sharing your thoughts on this issue.

[taxxcpa]

I forgot to e-file one but the client called asking "Where's my refund?"

I thought it had been filed, but when I checked to see when I had filed it, I discovered I hadn't filed it yet. Fortunately he had not waited too long to call me so the delay wasn't too bad. What scred me was that it could have been several months if he had not called.

[Mel in Hawaii]

Does this warrant a feature in the program that warns you for returns that haven't been efiled or marked filed? Or would that just be annoying like Vista's continual confirmaiton prompts? Would it also be nice to be able to set this to only pop up after say April 10th or something like that?

[MAMalody]

Personally, I don't think any automatic reminder is necessary. I currently have three returns that are completed, transmitted to the client and for their reasons they have not yet returned the Form 8879. I have contacted once a monthly since the return has been completed. This reminder would not prevent this from happening.

[kcjenkins]

I think just looking at the efile manager, and clicking 'incomplete' and looking to see what is not checked is enough reminder. I also check the 'rejected' and the 'held' categories, every day as soon as I log in, so that anything that is still in 'held' can be followed up on, and anything rejected ditto. Beyond that, I think that you just have to recognize that you are human, and so you will sometimes make a mistake, no matter how careful you are. And forgive yourself on that basis.

[mcb39]

I think just looking at the efile manager, and clicking 'incomplete' and looking to see what is not checked is enough reminder. I also check the 'rejected' and the 'held' categories, every day as soon as I log in, so that anything that is still in 'held' can be followed up on, and anything rejected ditto. Beyond that, I think that you just have to recognize that you are human, and so you will sometimes make a mistake, no matter how careful you are. And forgive yourself on that basis.

In view of all of the replies to my post, I have indeed forgiven myself and moved on. My client will have his money by this weekend. On the other hand, I forgot to file my husband's Sales Tax Return which is due on the 20th until the 23rd. I hope the DOR will be as forgiving...too much going on in my life right now, which I know is no excuse. I am taking a week of R and R.

[mdmcfarland]

I had another client call again today regarding his stimulus payment. When we got to digging further, we discovered that he too had not sent us his signed authorization. He remembers getting a copy of his return and that authorization but thought since he had efiled with us for several years that he didn't have to sign it every year. He owed money in 2007 and had wanted to pay with a check so I sent him a voucher. He did send this in on time.

As soon as I receive his signed authorization I will efile.

I'm not sure how to do this. His return shows a balance due, but he has paid this. How do I show this?

[MAMalody]

I just had one like that (except in mine I had to ask them three times for the form and then they told me what was up) and what I did was to count the payment as a late 4th qtr payment. I will find out if that was right.

[Jack from Ohio]

I had another client call again today regarding his stimulus payment. When we got to digging further, we discovered that he too had not sent us his signed authorization. He remembers getting a copy of his return and that authorization but thought since he had efiled with us for several years that he didn't have to sign it every year. He owed money in 2007 and had wanted to pay with a check so I sent him a voucher. He did send this in on time.

As soon as I receive his signed authorization I will efile.

I'm not sure how to do this. His return shows a balance due, but he has paid this. How do I show this?

Just e-file it as is. His account at the IRS will have a credit to offset the amount owed on the return.