Have you paid your taxes today?

I once received a letter from the IRS saying I owed back taxes. The amount was about $900 with an additional $1,100 in interest and penalties. The interest was 11% but it started January 1 of the year of the taxes, not when I filed my taxes. They tacked the interest on the amount owed and the penalty for almost 2 years before they notified me I owed the tax. Nice way to do business find a mistake and wait a couple of years to build up the bill and then hit you with it and give you 30 day to pay in full. By the same token they hold my money for 18 months interest free.

I believe there's more to this story. I've been doing business and personal taxes for many years and the IRS does work with business owners and individuals to resolve problems before sending agents out. It's unclear whether the letter mentioned in the article was strictly regarding his 2009 taxes or the back taxes that were owed for 2006. The IRS's most effective tool for getting what they claim you owe is their ability to take it directly from the company's or individual's bank account so I have to question why that wasn't done in this case, especially considering the amount was small. I know that this happens because I helped a veteran last year who had this done to him. He received the letter from the IRS *after* the funds were taken. In his case the IRS had to return the money because his only income is from the V.A. As far as interest and penalties go...the penalties come first, the interest is added to that, followed by another penalty the following, followed by additional interest and so on. So, it's very likely that 4 cents turned into $202 in 3 years. To answer your question, our company taxes were filed in early Feb. and so were the taxes of the businesses, friends and family I do taxes for.

I paid my taxes and received my return in less than 2 weeks. But I'm waiting to pay the state until the last minute :}