The Burden of Automated Systems: Tax Payment and Filing Date Differences Automatically Produce Notices

Taxpayers who have timely filed income tax returns and paid any taxes owed by the required due dates may still receive a notice from a federal or state taxing authority regarding unpaid taxes due.

Many government agencies have automated components for tax return or payment processing. While a taxpayer is not legally required to remit taxes due until the filing deadline, if a return is filed at a date earlier then the payment date, the processing system may automatically generate a notice indicating taxes due.

For those individuals (and businesses, too!) that receive a notice stating taxes are owed, but maintain records which indicate payments were timely made, do not panic! This notice was likely automatically generated if the return was filed before the government received the tax payment, perhaps at a later date, but not late.

In such a situation, the Internal Revenue Service or state(s) will ultimately adjust the payment records  and include proper dates.  Any penalties or interest assessed on the notice should be waived.  Shortly after receiving the initial notice, taxpayers will receive a revised notice stating the account is up to date and no additional tax is due.

The taxpayer should share all notices and proof that the payment was debited from their bank account to their tax professionals so they are aware of the situation.  No further action needs to be taken at this time as long as the tax owed and the tax payments correspond to what is reflected on the Internal Revenue Service or state jurisdiction notices.

For more information please contact your Marcum tax professional.