On September 23, 2005, the Internal Revenue Service began sending notices to tax payers in thirteen states that there may be a problem with their tax payments. Here is the scoop.

Traffic School?

It seems one of the trucks carrying the payments was involved in a traffic accident and the payments were lost. The accident actually occurred in San Mateo, California and resulted in…wait, I have to stop laughing. Okay. Deep breathe. The tax documents were “ejected into the bay” and can’t be recovered! There must be a couple of great white sharks wondering what is going on.

The payments in question are estimated tax payments made by anyone to the San Francisco mail box for the IRS in the first few weeks of September. Yes, the IRS uses drop mail boxes like everyone else. How encouraging.

The little traffic snafu suffered by the IRS apparently wasn’t so little. The service is reporting that as many as 30,000 estimated tax payments from individuals and businesses in 13 states may have been lost.
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The magic tax date of April 15th has passed. If you did not file a tax return or extension request, you need to consider the following.

Didn’t File Anything with the IRS on April 15th?

The Internal Revenue Service is a bit touchy about filing tax returns. It would prefer you to file a return or extension to doing nothing, even if you cannot pay. If worse comes to worse, the IRS will simply put you on a payment plan. Failing to file anything, however, can lead too more unwanted attention from the agency than you could possible want to receive.

In general, you should always try to pay your taxes whenever possible. Failure to do so can lead to brutal penalties and interest charges. If the IRS thinks you are up to something funny, the penalties and interest can add up to 25 percent of your tax bill. That is a big chunk of change!

If you are due a refund, but just did not get around to filing your taxes, you do not have to worry about penalties and interest. There are none since you are owed money. That being said, are you nuts? Why would you give the government an interest free loan? What could you be using that money for in your daily life? Get off the couch and get a return filed so you can get your money back. For obvious reasons, few people let refunds sit at the IRS. If you are insanely lazy, keep in mind you will lose the refunds if you do not claim them within three years of the original filing date. Frankly, you deserve to if you are that lazy!
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Over 50% of marriages end in divorce in the United States. Many divorce decrees include provisions for the payment of alimony. The IRS takes the position that such payments constitute a form of income and create an alimony tax deduction for the person making payments.

According to the IRS, alimony payments are taxable to the recipient in the year received. In turn, the person paying the alimony can claim a deduction for the payments if the following tests are met:

1. You and your spouse or former spouse do not file a joint return with each other,

2. You pay in cash (including checks or money orders),

3. The divorce or separation instrument does not say that the payment is not alimony,

4. If legally separated under a decree of divorce or separate maintenance, you and your former spouse are not members of the same household when you make the payment,
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April 15th – “The Day of Reckoning”! Every year, millions of Americans get ready to pay taxes to Uncle Sam, or get ready to collect a tax refund from Uncle Sam; when did this become the great day that it is for taxpayers, and when are we actually required to file a income tax return? Let’s take a look at the beginnings of the income tax date of April 15 and why it was chosen?

The first known income tax that Americans were legally required to pay was enacted during the early 1860s, and the Presidency of Abraham Lincoln. The Civil War was proving very costly to finance, and the President and Congress created the Commissioner of Internal Revenue and enacted a law requiring citizens to pay federal income tax. This could be considered the start of our modern day income tax. This income tax was based on principles of graduated or progressive taxation and of withholding income at the source. The commissioner was given authority to assess, levy and collect federal income taxes. The authority to enforce tax laws by seizure of property and income and by prosecution.

Originally, the deadline for completing and filing your individual income tax was not April 15th. In the beginning, it was first set for March 1st. Then, during 1918, Congress pushed the date out to March 15th. Then, in the great overhaul of 1954, the date was once again moved forward to April 15th, and this is where it remains today. Why April 15th? The main thought from most scholars say the reasoning is that the date gives the IRS more time to handle the work load and more time to hang on to your money before offering a tax refund. This date has only been set this way for a little over 50 years. That’s not very long, in historical terms, and it could possibly be changed again.

If you are an individual taxpayer, you are required to file either a return or an extension of time to file (Form 4868) by April 15th. Corporate and other legal entities are required to file their federal income tax return by March 15th, and if not, they also must file an extension of time to file. What this extension does not do, is to extend the amount of time you have to pay any taxes due the government. So, if you are unable to ready your personal or business financial information in a timely manner, and have no reasonable estimate as to the amount of tax you may owe, you can expect to pay some form of penalty.
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