While the Internal Revenue Service is the subject of this article, it is just as much about "Computers" and ways to find more "Peace of Mind".
Part of the subject about this article is about Computers because we live in the
Computer Age.
By living in the Computer Age I mean that every financial transactions that
we perform thru a job, bank or retail store is on a recorded computer file or database that
the Internal Revenue Service has a write to and you can be 100% sure will inspect.
In my lifetime reviewing records for audits has changed from manual inspection of
tax records where tax examiners could make a mistake or ignore the error because
the amount of revenue and/or expenses are so small.
To the modern Computer Age where there is no chance computer system will miss
records and tax examiners can show mercy because the reports put all tax information
on a report that can instantly reviewed by income tax supervisors and government officials.
So once you get a W2 wage statement or 1099 from a contractor or bank for interest, it is not a matter of if you will have to answer a taxing agency about that income, it is only a matter of when.
And if the tax form you prepared does not match with the records on the IRS database
you can be sure you will first get a letter from the IRS asking you to explain the difference.
If your excuse for having different numbers than the IRS database is not acceptable you
will receive either a bill for the difference or a hearing to try to explain why the IRS should
not criminally prosecute you if the difference in income falls into specific categories.
This article is also about "Peace of Mind." While every human being is different, the time I did not file my income taxes on time was a period of time I lived in fear because I always knew a day would come when I would get a bill or a request to be at a hearing explaining why I did not file my taxes.
The person who is naive enough to think the IRS will not remind them of their obligation
will have double worries because not only will they have to pay the original tax bill, but also interest in penalties which sometimes double the obligation.
Filing your taxes on time will give you more Peace of Mind because you will know
- You will not have to worry about an receiving unexpected letters from the IRS demanding money or threats of levies.
- If you owe the IRS money the power to control the payments of the tax bill is in your hands.
- You can rest a little easier at night knowing you are in good standing with the IRS and only positive information is on your credit report in regard to the IRS.
Do the right thing and file your taxes before the tax deadlines.
This article is written like a father talking to his child, hoping his advice could prevent them from making the same mistake he made advice that was never given to him.
The author is registered tax preparer in San Francisco, CA
