Last-Minute Filing Fever Hits Procrastinators
If it were a crime, Saroj Sharma would plead guilty to procrastination.
She has delayed as long as she could, but now the deadline is upon her. By April 15, Sharma and about 37 million other reluctant taxpayers must file their federal income tax returns with the Internal Revenue Service.
“You know how it is,” said Sharma as she bustled into the Reseda offices of Jackson Hewitt Tax Services to have her return completed. “You don’t know what is going to happen, so you keep delaying the inevitable.”
With less than a week of the filing season left, the IRS reports that about 30% of the nation’s taxpayers have yet to send in their returns. And the percentage of last-minute filers is even higher in California.
Confusion and disorganization rank among the top reasons for waiting until the last minute to file, accountants say. However, many individuals postpone the day of reckoning because they’re sure they owe taxes and they don’t have the money.
These taxpayers are best advised not to delay much longer. Failing to file a return or an extension before April 15 is the worst strategy, leaving individuals liable for hefty penalties that can mount to 25% of the tax owed.
Those who do not have the money should still file a return and send as much of the tax as they can afford, said Gregory D. Snyder, partner at the Burbank accounting firm Rose & Snyder. The IRS will bill them for the rest.
Individuals will still be charged interest and some penalties on the unpaid amount, but the cost is far less substantial than for not filing at all.
Specifically, the IRS slaps a 5% penalty on non-filers for each month they delay until the total penalty reaches 25% of the tax owed. In other words, if you owe $1,000 and fail to file for five months, your penalty will increase the total amount due to $1,250, plus interest.
If, however, the taxpayer files and just doesn’t send the check, the penalty is generally only 0.5% per month--or roughly $25 on that tardy $1,000 tax bill, plus interest.
“The important thing is to file the return, even if you owe money and can’t pay it,” said John T. Hewitt, president of Jackson Hewitt Tax Service in Virginia Beach, Va. “I have seen people wait for five years. By the time they finally file, they owe double or triple the original amount.”
Of course, some maintain that money is not the problem. They just haven’t found time to get organized.
These individuals should consider filing an extension to get an extra four months--until Aug. 15--to get their federal returns together, Snyder added. Although they will need to estimate their tax and send in a check for the amount due, the IRS allows extenders substantial latitude in getting the numbers right, he said. However, underpayments are still subject to the 0.5% penalty plus interest that accrues at a rate of 10% annually.
Meanwhile, the nation’s biggest tax preparation chains maintain that there is still time to get returns filed professionally.
H & R Block and Jackson Hewitt Tax Service, as well as many other tax preparation offices, are open long hours during these final days of the tax filing season to accommodate procrastinators. Returns usually will be prepared while the taxpayer waits.
“When somebody comes in with all their information together, it is real fast and thorough,” said Richard B. Odemar, general manager of the Jackson Hewitt office in Reseda. “Twenty minutes, and you’re gone.”
