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Tax Prep Dispatch: Tax Triage

By Barbara DelBene, Guest Contributor on 04/14/2017 @ 12:00 PM

Tags: Taxpayer Opportunity Network

It’s Saturday, April 15. You have seven volunteers and a mob in the waiting room – way more than you can handle in one Saturday. Moreover, clients on the last few days of the filing season tend to be a hapless bunch. They have strange situations; e.g., no idea who had health insurance when, prior year returns, stories about other people claiming their kids and tax records that look like a six-year-old’s origami project. How do you decide who to serve?

Suggested priorities, from most important to least important:

  1. 2013 return - refund
  2. Amended return to correct an error made at your tax site
  3. 2016 return - balance due
  4. 2016 extension - balance due return
  5. Amended return - balance due
  6. 2016 extension - refund return
  7. Everything else

2013 Return - Refund

If someone has an overpayment on a 2013 return, that person must file by April 18, 2017 to get the refund. If filed later, that money is gone. IRS will not issue a refund when an original return is filed more than three years after the return due-date.

Amended Return to Correct an Error Made at Your Tax Site

It happens. We owe the taxpayer the service of correcting the error as soon as possible. This filing season, this could include ACA errors made by the TaxSlayer software. Even though the VITA site did not directly cause the problem, these taxpayers should receive priority. And make sure that they get a copy of the apology letter from TaxSlayer.

2016 Return - Balance Due

When someone files late and has a balance due a late filing penalty will be assessed. The penalty is 5% of the balance due for each month – or part of a month – that it is late for up to five months. For example, it looks like Mary will owe $800. If she files at the end of May, she’ll owe the $800 plus an $80 penalty. Mary should file her return by April 18, even if she can’t pay.

2016 Extension - Balance Due Return

Some folks just don’t have it together yet. If a client is not ready to prepare the return and it looks like the client will owe, advise the client to file for an extension and pay the anticipated balance due with the extension request. Both need to be done by April 18. See last week’s Dispatch for more information about extensions.

Amended Return - Balance Due

A client with a probable balance due needs to file as soon as possible to reduce interest and, perhaps, penalties.

2016 Extension - Refund Return

Yes, sometimes a client with an overpayment who is not ready to file should file for an extension. A taxpayer who has a legal filing requirement should really file the return or file for an extension by April 18. Late filing penalties are not assessed on returns with an overpayment. But if the client subsequently owes – for example, maybe IRS audits the return and discovers unreported income – then the late filing penalty would be assessed. Better safe than sorry.

Everything Else

This includes 2016 returns with no filing requirement – for example, someone who is just filing to get some withholding back, all 2014 and 2015 returns, various amended returns and all of the other flotsam and jetsam that floats through your door.

Final Notes

Does the concept of triage apply to taxes? The non-medical definition of triage is "assigning of priority order to projects on the basis of where funds and other resources can be best used, are most needed or are most likely to achieve success.” This definition certainly applies to tax sites.

Tax triage may not be life or death; that is, if you make the wrong decision, no one is going to bleed out or convulse. Nonetheless, know that you do difficult, important work. Here’s hoping that your filing season comes to a productive close, all of your last-minute returns are accepted and that most of your clients say thank you.

Problems related to TaxSlayer have made this an especially challenging tax season. VITA people really care about their taxpayers and take pride in the quality of their work, making all this apologizing for errors and downtime and delays more difficult. Even with the software difficulties, our service could be worse – as I was reminded by this video. (The tax part starts at about two minutes in.)

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