Can't Pay So They Extend

[Nashville]

More and more of a factor every year, or so it seems.

You prepare the return in the winter/spring. Return is ready to e-file, but client owes money and doesn't want to e-file his return and be harrassed by IRS collection notices. So instead of e-filing, client asks you to file an extension. Not because he cannot file, but because he cannot pay. We know this is not a legitimate reason but it is fact, legitimate or not.

So this guy's return remains in queue for e-filing, and October 15th approaches, and client still has not released permission to e-file. (This is his option whether we like it or not). He has either forgotten or wants to wait until the last day before getting hassled by IRS letters. Keep in mind, almost everyone who cannot pay by April 15th are no better prepared to pay on October 15th either, so they just kick the can down the street. All of a sudden it's October 15th and these people start calling, or worse still, they DON'T call and blame YOU because you didn't notify them.

EFFECTIVE NEXT YEAR: Anyone who has their return prepared and extends because they don't want to pay and don't want ugly letters from IRS? OK folks, I file an extension and a PAPER RETURN and taxpayer is total control of both filing AND paying whenever he ****-well pleases. Our job in too many cases has become taking on problems that are the client's problems and shouldn't be ours.

[FEDUKE404]

Other options

Why not just efile a no-payment return, give the client a Form 1040-V, collect your fee, and move on?

I seriously doubt if the client is going to "be harrassed by IRS collection notices" or would be "getting hassled by IRS letters" during tax-filing season.

If the guy wants to postpone the issue, you also can file a no-payment filing extension. (Just be sure you clearly explain the rules/penalties/etc to him, especially how the clock for unpaid taxes starts running on April 15th.)

It sounds like this guy has continuing (year-to-year) tax problems with the IRS. I might consider showing him the door and suggest a store-front preparer. No need for him to poison the well as relates to your attitude toward your other clients.

Bottom line: Payment of tax liability or "concern" over getting correspondence from the IRS should be of zero concern to you.

Just my 2¢.

FE

[Nashville]

Show Them The Door

"Show Them The Door" has a ring that sounds like the ultimate remedy and is much more popular when spoken on this forum than real-life. If we're honest, none of us wants to lose customers even though some of us would like to get rid of the PITA people. One of the guys on my "can't pay" list has no standing with me, but his wife has friends, a dozen or so of which are my clients. To "show this guy the door" would be a poorly-conceived knee-jerk response.

The "guy" mentioned in my previous post is really "several" guys. (Guys = gender neutral) And it is the same people year-after-year, because IRS interest and penalty rates are now so low that it doesn't pay to go to the trouble to get a bank loan to pay them.

And yes they will get "harrassed" by collection letters if they file on April 15th and don't send in their money. Ironically, I don't have any of these late payers who don't drive a late-model car, have decent paying jobs, and don't hesitate to spend several thousand dollars on stuff that "they" want. And they just shove the IRS to the back-of-the-line. And this is becoming strategy for them, year-after-year.

I think my response of filing paper returns is best, and ridding my desk of last-minute problems that accumulate around October 15th. I've got enough of them already. A paper return puts the entire fate of filing and paying in the hands of the client who creates the problem.

[David1980]

I like the paper return solution as well, though I do wonder how it interacts with the e-file mandate. I don't think it'd be enough returns to ever really attract attention, but what reason do you give on the 8948? I'm thinking probably #1 - taxpayer chose to file this return on paper. Especially if you present it as "I can efile this for you by 4/15 or I can give you a paper copy that you can mail whenever you want." 6c "other" is probably more honest, but the honest explanation does sound pretty terrible.

[FEDUKE404]

Problem resolution

Sounds to a certain extent that you are a facilitator of your own problems. Either you repair the problem, or you continue to live with the problem, regardless of your personal definition of "knee-jerk response" or your circle of friends.

Stated more succinctly: It's your choice!

If you can "justify" paper-filing, as David1980 explained, then just go with that.

At this point I'm not really quite sure what the purpose of the original post was. . .

FE

[taxea]

if the client has paid for your services print him a paper return, sign it., give the client the address to send it and move on. When or if he files it is up to him.

[JohnH]

I vote for sending the client a paper copy, with the 8948 attached.
The reason entered on line 6c could be:
"Extended tax filing deadline of Oct 15, 2014 is approaching and client has not given authorization to preparer to e-file."

I'd attach a sticky note to the first page, calling the client's attention to the wording on the 8948.
That might prompt them to give you a call and follow up with you in a timely manner.

[TXEA]

The correct explanation would be that the client refused to e-file the tax return (i.e., client chose to file the return on paper). Print the return out - give it to them, and the letter should provide the due date (April 15).

Give the client a blank extension. Tell them if they do not want to file the return, then they need to send in an extension.

This e-file mandate has put an undo burden on tax preparers to be in essence responsible for the client's obligation to file a tax return on time. When I am finished with the return, I am finished. It is either e-filed or the client gets a mailing copy of the return. I am not going to sit around and wait for six months for the client to decide to file.

[Golden Rocket]

Tax Enforcers

As TXEA stated, form 8948 is the IRS way of getting tax preparers to enforce the e-file mandate.

Some of their language has reflected overtures of having "thousands of preparers" as an "extended arm of taxpayer enforcement."

When pressed on the issue, the IRS continues to insist that we are not expected to audit the taxpayer. However, the penalty provisions belie this posture. Asking to see taxpayer mileage logs is an auditing function. Asking to see contribution receipts for $250 is an auditing function.

I think there are reasonable limits beyond which the preparer should press the taxpayer for substantiation, and there should be some sort of responsibility upon us for that. I will state unequivocably that most of my clients are more forthcoming with the IRS than the IRS is with the public.

[JohnH]

This e-file mandate has put an undo burden on tax preparers to be in essence responsible for the client's obligation to file a tax return on time. When I am finished with the return, I am finished. It is either e-filed or the client gets a mailing copy of the return. I am not going to sit around and wait for six months for the client to decide to file.

I agree 100%.

PREPARING a tax return is something quite different and apart from FILING a tax return.

Until IRS merges those two into the same act, I'm going to continue to request exemption from e-flinging.
If they ever succeed in merging them, that's the day I quit.

[Nashville]

Belligerence Noted

Sounds to a certain extent that you are a facilitator of your own problems. Either you repair the problem, or you continue to live with the problem, regardless of your personal definition of "knee-jerk response" or your circle of friends.

Stated more succinctly: It's your choice!

If you can "justify" paper-filing, as David1980 explained, then just go with that.

At this point I'm not really quite sure what the purpose of the original post was. . .

FE

Duke, you have once again responded with your usual legendary belligerence. If you don't think the issue is relevant, just ignore it. Over and out.