Wednesday, August 12, 2009

I can File Late, I've got a Refund Coming Anyway

Yesterday afternoon a colleague of mine sent me a link to this article from Roth & Company’s Tax Update Blog explaining how important it is to file your tax return on time, even if you are expecting a refund. Check out their article below, with an example of a Pennsylvania woman who had to learn the hard way that you should never wait to file a return.

Cynthia Doyle had a refund coming of $12,785.02 for 2002, including $10,000 she paid with an extension request. If she ever filed her 2002 return, the IRS had no record of receiving it, and Ms. Doyle apparently had no evidence that she had filed. The IRS contacted her in October 2006 asking for her return - conveniently after the statute for limitations for a 2006 refund had expired.

While the taxpayer said she had filed on time and had asked for the overpayment to be applied to her 2003 taxes, the IRS said it was up to her to prove it:

However, absent being eligible for an exception under § 7502, a taxpayer's own uncorroborated testimony to show timely mailing is not enough to establish a presumption of delivery under any view of the law.

In this case, plaintiff does not allege she used either registered or certified mail when she sent her original 2002 Tax Return. See Complaint at Paragraph 47 ("I have never sent tax returns certified mail..."). Absent proof of such mailing, plaintiff is ineligible for the § 7502(c) exception to the physical delivery rule... In view of the fact that plaintiff cannot establish that she timely mailed an original 2002 Tax Return, the physical delivery rule dictates that plaintiff's 2002 Tax Return was deemed filed when it was received by the IRS on October 30, 2006.

We can take away two things:

- If Ms. Brown thought she didn't have to file because she was overpaid, she was horribly mistaken.

- If Ms. Brown did file on time, spending an extra $5.10 for certified mail, return receipt requested would have really paid off.

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