Yep, just before Christmas I received a friendly Christmas greeting from the Internal Revenue Service noting that they never processed my 2003 federal tax return and because they haven't received payment for 4 years, I now owe $10,000 in penalties. Incidentally enough, this isn't the first time this has happened. Two years back just before my birthday, I received a similar letter demanding close to $40,000. Thankfully, I was able to find enough of my tax return and an old bank statement to show proof that I didn't owe them anything and I got a return of $111. Unfortunately this time around, if I'm suppose to get a return, its too late to receive it. Talk about fair play.
So, thinking that I'm not the only one this has happened to, here are some helpful tips to keep the tax man from knocking personally at your door.
1. Keep copies of everything. I try to keep a pdf version of my tax return on my computer and on my backup
drive. I also have a CD with this data. Starting this year, I will also scan in my receipts in case I get audited or need to provide proof quickly in case this happens again. You may want to invest in a document scanner that will make this job a whole lot quicker, however I would group things like gas receipts together on the scanner to create a full page of receipts. Also, make a copy of all checks that you send for your quarterly payments.
2. Consider using a separate credit card for all business expenses. Why a credit card? Well, my favorite credit card has loads of benefits for using it and as long as I pay it off at the end of the month, the interest is not of a concern (just remember to pay that baby off). Plus, the statements are very detailed. If you have a business checking account, that would also work.
3. If you get the special IRS greeting, don't panic. Make telephone contact right away and see if there are any further instructions. If you get one, it will be on a Friday after their call center has closed. Typically, you will be given 30 days to respond to the letters. The folks I spoke with both times couldn't have been more gentile. Gather your paperwork up, sign the documents again if necessary, and include a letter along with your return and copies of your checks. When they said I owed $40,000, I didn't have a check but thankfully the bank I used sent statements that said exactly who I wrote those checks to. So instead of Check 240, it said Internal Revenue Service.
4. Don't ignore anything from the IRS. This goes without saying that the only department in government thats ruthlessly efficent is the one that takes the money. If we repurposed these people to watch the border, there's be no more illegals crossing either border. If we give them a gun and sent them to watch the streets, we'd be crime free. But alas, God has given these guys the gift of taking money and that's what they're going to do, like it or not.
Sincerely;
Jonathan Osman
The Charlotte House Hunter
Charlotte NC Homes, Charlotte Real Estate
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