Do you ever wonder what professional tax preparers do on the 15th of April (or the 16th or 17th or 18th, depending on the day the season ends)? The perception is that preparers are sitting around waiting for the last-minute rush.
I suppose some firms and preparers bring in extra people to help with the anticipated rush. Other firms close the day before the end and go on vacation.
There are many reasons for closing early or not taking new clients on the last day. If someone waits until the last day, you have to ask, “Why?”
Are they missing forms? Did they try to do it themselves the night before and realized they could not? Were they behind in their bookkeeping?
Or did they wait until the last minute because they figured their chance of an audit would be diminished in the congestion of returns?
Well, this year, the congestion resulted in the IRS computers going on strike, giving taxpayers an extra day to file. But it did not diminish any taxpayers’ chances of being audited.
Many audits are random. Others are a result of information provided in your return that does not match information provided by third parties such as payrolls, interest and dividends, sale of assets reported by closing attorneys, and other required information sources.
Thinking that it will be easy to hide income by filing during a congested time won’t work for another reason. Aside from arithmetic errors, much of the matching and questioning (audits) occur one to two years later.
A return filed in 2016 for the 2015 tax season might generate questions (audit) in 2018, so please do not throw away your tax return and supporting documents for at least four years.
Coming in at the last minute increases the potential for an incorrect or inaccurate return. A simple return can be completed in a short period of time. Printing up the return and getting permission to e-file takes longer.
New clients with some complexity, such as a small business, rental income or other sources of income or loss, might require interviews, research and sending the client home for more information.
April 15 is not the day to work on such a return unless there are no other clients and accuracy is not guaranteed. Better to file an extension. Remember, the extension just gives you more time to file. There is no extension to pay what is due.
If you are one of those who filed in haste, amend in leisure. You have three years unless the auditors catch up with you first.
Virginia Moryadas is a tax preparation professional in Bluffton.