Bounced Checks

[Snaggletooth]

I am attempting to move ALL my clients OUT of paper filing and into E-filing. I'm not doing a very good job.

The most resistance comes from the people who have to pay IRS. The easiest e-file option for them is simply to have their payment drafted from the bank on April 14th. (I don't leave room for a mis-transmission on the 15th). They can also e-file by simply mailing in the 1040-V if they owe money if they object to the bank being drafted.

As I am wont to do, I caution them about making sure the money is in their account, and to REMEMBER it is coming out so they won't get their banking messed up. Furthermore, I made the remark that the IRS would treat a bank rejection for lack of funds the same as a bounced check, and that the normal NSF fee assessed by the IRS is $700.

I'm not sure I am correct about treating this bank rejection the same as a bounced check. One client shuddered at the thought of a $700 fee for owing $125 on his taxes, and insisted on a paper return.

Much of my clientele is family & friend related. This guy has told his other family and friends about this $700 fee and now I have 8-9 people absolutely refusing to file with anything other than a paper return. One of them even had a refund, and still insisted on a paper return.

Exactly what happens if the IRS drafts a bank account on April 14 and the bank doesn't pay because the money is not in the account? I may have shot myself in the foot.

[Beth]

Bounced Checks

If your goal is paperless, focus on getting them to efile and get fast refunds for deposits, and then ask if they want to mail in a payment or have it withdrawn.

People are just coming around to direct deposit, but are not yet use to having someone in their bank accounts so to speak.

You might be overloading them with info, scaring them off.

[S T]

My viewpoint

Snags,

I am now efiling about 95% of my tax returns. I also had resistance, but gradually have won all of the clients over the last 2 years and try to bring them into the age of Technology.

What I do, is any refunds 90% of the time are direct deposited, still have that 10% that want to see that "paper check".

On t/p with amounts due either federal or state, I efile, but then send them the payment vouchers for Federal and State, with instructions that the amount needs to be paid by April 15th (or whatever the current year due date is). I myself do not like someone messing with my bank account and drafting out $$, so I don't expect my clients to like it either. so return is timely filed by efile, but it is up to the t/p to make the Tax Payment.

I let the clients know that they are in charge of their responsibilites, and paying the bills such as the IRS and State taxes on time, as we discussed.

Hope this helps,

Sandy

[Uncle Sam]

Bounced Checks

I have, up until last year resisted the e-filing thing. New York State mandated it last year, so I did it. I can do without it also - it isn't the greatest thing in the world to me.
Even though I have clients e-file, I still have them pay any balance due by check and voucher. Have not informed them of e-paying.
I also have not gone through the exercise of informing them of the direct deposit option. Many are aware of it since it was introduced a few years ago - but I have not offered in telling them about this year's 3-way option.
The less they know about how "convenient" IRS is making it for them, the less problems I have in getting them to be compliant in other respects.
If they ask about these options and want them, I won't stop them and will follow through in having them get these "goodies", but I feel that the more you give in to the government's e-thing, the more things can get messed up - and that's what I'm trying to avoid.

[Snaggletooth]

Ask again

Exactly what happens if the IRS drafts a bank account on April 14 and the bank doesn't pay because the money is not in the account? I may have shot myself in the foot.

Thanks for all the well-thought out suggestions that I should have considered before shooting myself in the foot. I am, however, confronted with a damage control situation and would appreciate an answer to the above if anyone knows.

Thanks, Ron J.

[Beth]

Ask Again...

From the IRS website at http://www.irs.gov/efile/article/0,,id=101317,00.html

"Taxpayers will be notified if a payment is returned by the financial institution due to insufficient funds, incorrect account information, closed accounts, etc. If this occurs, the IRS will send a notification letter to the address on record explaining why the payment could not be processed. The letter will provide alternative options for making the payment. For questions regarding the letter, please call 1-888-353-4537.


In the event the financial institution is unable to process the transaction, the taxpayer will be responsible for the tax payment and for any penalties and interest incurred."

[S T]

Difficult Question

I googled and searched, but this about all I could find. Can't find anything on the IRS website.

Penalty for bounced checks to IRS
If you write a check in payment of any tax due and the check bounces, the IRS may impose a penalty. The penalty is either 2% of the amount of the check - unless the check is for $750 or less, in which case the penalty is the amount of the check or $15, whichever is less.

http://www.gottrouble.com/legal/tax/penalty_other.html

Then I am sure, which the article doesn't address there are additional penalties added to the taxpayer's account for late pay,etc.

Info does not seem readily available, but I am sure someone on this Board can find it.

So where did you read it would be $700 fee?

Sandy

[SueBaby]

I am attempting to move ALL my clients OUT of paper filing and into E-filing. I'm not doing a very good job.

The most resistance comes from the people who have to pay IRS. The easiest e-file option for them is simply to have their payment drafted from the bank on April 14th. (I don't leave room for a mis-transmission on the 15th). They can also e-file by simply mailing in the 1040-V if they owe money if they object to the bank being drafted.

As I am wont to do, I caution them about making sure the money is in their account, and to REMEMBER it is coming out so they won't get their banking messed up. Furthermore, I made the remark that the IRS would treat a bank rejection for lack of funds the same as a bounced check, and that the normal NSF fee assessed by the IRS is $700.

I'm not sure I am correct about treating this bank rejection the same as a bounced check. One client shuddered at the thought of a $700 fee for owing $125 on his taxes, and insisted on a paper return.

Much of my clientele is family & friend related. This guy has told his other family and friends about this $700 fee and now I have 8-9 people absolutely refusing to file with anything other than a paper return. One of them even had a refund, and still insisted on a paper return.

Exactly what happens if the IRS drafts a bank account on April 14 and the bank doesn't pay because the money is not in the account? I may have shot myself in the foot.

I only had 1 client that way and they sent ME and the taxpayer a letter to inform them his check bounced and was no good. They applied penatlies and late fees until he paid. I adviced him to pay ASAP or it will only get worse. He paid.

[Snaggletooth]

Thanks

...for the responses. I think I'll just shut up about the $700 because it's not realistic.

I did have this happen for a business client who was charged $1400 for two such instances EFiling his 941 deposits, but the payments were over $20,000 apiece.

Thanks again, Snag

[Gretel]

Ron, one thing that might help you to convince your owing clients to e-file (not e-pay) is to tell them that this is the only way you and they will actually have proof that the IRS received their tax return and when they received it.

By the way, I mail form 9325 to all my clients and they really like it.

[Brian EA]

99% of my clients returns are e-filed and they are all 8879's. No 8453, so would not forget to mail them. E-filing is done while the client is still sitting at my desk. If for some reason there is a rejection, I just call them and make the correction. No e-pay..They use the voucher and send in the payments the 2nd week of april.

I also rarely print the Ral checks. Convince that direct deposit is the best thing going on today. In that case they do not have to come to the offic e for a 2nd visit. Works like a charm

brian