Check sent with extension not cashed by IRS

[BHoffman]

Client mailed form 4868 with payment via certified mail and kept the confirmation of delivery.

IRS never cashed the check. I can only assume they also did not process the extension so anticipating late filing penalties.

Question:

I have the POA but have not yet submitted it to IRS and am currently on hold forever with IRS tax practioner line.

Should I have the client stop payment on the check and address the late filing penalty when the client receives it, or try to deal with this over the phone?

Thanks for advice

[JohnH]

My first thought would not be to stop payment until more info is gained, either by phone or correspondence. The problem might be your client's fault. Maybe the check wasn't signed, amount wasn't legible, a difference between the handwritten amount and numerical amount, or a wrong date entered on the check, etc. Honest mistakes happen.

The best course of action would be to have the client send another check for the same amount and then stop payment on the original check only after the second check has cleared the bank. If it happens they lost everything and never logged in the extension request, this would minimize the P&I you'd be dealing with & trying to get removed. Of course, that depends upon the amount of the payment and the client's ability to have their funds tied up a few weeks while waiting for check #2 to clear the bank.

[AZ-Tax]

I always push pay Feds w/CC

I always push for clients to pay with Credit Card but I still have those who refuse and still go check route.

[ATSMAN]

I agree with JohnH. If the original check is lost in transit and was made payable to US Treasury the chances of a crook cashing it are remote. Checks made to US Treasury are non negotiable.

[Nashville]

Deal with it later

John's advice is good, but most likely the customer is not amenable to sending another check while the first one is still outstanding. And IRS will have a monetary penalty for the bank refusing to honor the check. And unless the amount due was small, there is a 90% chance that lack of funds was the reason for the extension anyway.

The key is that BHoffman has proof of delivery. That means they can't weasel out and pretend they didn't receive the 4868 or money. This one may require answering several ugly letters, but Beth does have the goods on them and will ultimately prevail.

[FEDUKE404]

Filing Form 4868 using mail service

I agree with JohnH. If the original check is lost in transit and was made payable to US Treasury the chances of a crook cashing it are remote. Checks made to US Treasury are non negotiable.

My first response would be why not file Form 8878 with (debit) payment in the first place and the problem is immediately solved? Within a few hours of filing you have acknowledgement that your Form 4868 (and any authorized payment debit) was accepted by the IRS. Problem solved!

As many TTB folks here immediately buckle at such a ridiculous suggestion, then also consider the following:

Did the taxpayer mail the Form 4868 to the correct snail mail address?? As shown on page 4 of the Form 4868 instructions, there are always two addresses for residents of a given state: one is for filing of a non-payment Form 4868 and the other is for filing of a Form 4868 plus payment.

If a check was enclosed and erroneously sent to a "no payment" address, there is a darn good possibility that check ended up in the trash.

FE

[BHoffman]

I hear you, FE. This client refused my suggestion of filing and paying electronically.

[JohnH]

If the taxpayer has proof of mailing, then he's probably OK on the extension no matter what happened to the check. But as FE has pointed out, there are a host of potential errors which could contribute to the problem and you may have to work at it to establish that the 4868 was actually mailed. That is the important point because it is timely receipt of the 4868 by IRS which gets the client off the hook for the 5% monthly FTF penalty. Payment of any money, or lack thereof, is secondary and only accounts for about 1% per month of combined P&I.

Mailing to the wrong address might explain the disappearance of the check, but the extension would still be valid. I think the most likely culprit is some sort of problem that has prevented IRS from processing the check. But anything is possible (at least it is with some of my clients).

[taxea]

If the check was attached to the extension then he has proof of payment. File the POA and check his account through E Services. I would not send another payment until the Treasury says they didn't get the payment.

[ATSMAN]

If the check was attached to the extension then he has proof of payment. File the POA and check his account through E Services. I would not send another payment until the Treasury says they didn't get the payment.

I don't think you have proof of payment by the assertion that the check was attached to the extension and you have proof of mailing on time.

What you have is proof of mailing on time only. So if IRS eventually cashes that check and charges interest and penalties you can get that abated by the timely proof of mailing. But if that check remains uncashed you got nothing to help you out.

I also agree that the best way to pay IRS or state taxes is electronically, direct debit.

[BHoffman]

Had another discussion with client. He stapled the check to the form. I assume IRS tossed the form and check due to the offending staple. I'll deal with the late filing penalty when we get the notice

[ATSMAN]

Had another discussion with client. He stapled the check to the form. I assume IRS tossed the form and check due to the offending staple. I'll deal with the late filing penalty when we get the notice

Was the check made payable to US Treasury or IRS? Was the soc, tax form and year on the memo?

I have seen many taxpayer make the check payable to IRS and on the memo put tax payment!

[FEDUKE404]

Another bump in the road

Had another discussion with client. He stapled the check to the form. I assume IRS tossed the form and check due to the offending staple. I'll deal with the late filing penalty when we get the notice

That in and of itself could have created its own problems, assuming the envelopes are machine-processed upon arrival. . . .

Pay by Check or Money Order

• When paying by check or money order with Form 4868, use the appropriate address in the middle column under Where To File a Paper Form 4868 on page 4.
• Make your check or money order payable to the “United States Treasury.” Do not send cash.
• Write your SSN, daytime phone number, and “2014 Form 4868” on your check or money order.
• Do not staple or attach your payment to Form 4868.

FE

[taxea]

Make a written request to the IRS for a Payment Tracer Research Record, include copy of the extension the check was attached to, the check number, date and amount, and a copy of the return receipt.

[BHoffman]

That in and of itself could have created its own problems, assuming the envelopes are machine-processed upon arrival. . . .

Pay by Check or Money Order

• When paying by check or money order with Form 4868, use the appropriate address in the middle column under Where To File a Paper Form 4868 on page 4.
• Make your check or money order payable to the “United States Treasury.” Do not send cash.
• Write your SSN, daytime phone number, and “2014 Form 4868” on your check or money order.
• Do not staple or attach your payment to Form 4868.

FE

Drake's form 4868 contains all the above instructions EXCEPT nowhere on the form does it say "Do not staple".