You only punish yourself

I recently spoke with a friend who prepares their own tax return. They insist upon filing on paper (!) and mailing in a paper check (!!) to the IRS. When I questioned this, they replied that they don’t efile because they don’t want to make things too easy for the IRS and they don’t do direct deposit/withdrawal because they don’t want to give the IRS their bank info.

I have bad news for this person

Paper filing does not really create “extra work” for the IRS. They already have automated systems in place to handle paper returns. It’s not like the IRS commissioner is staying up all night to manually key in your tax return. On top of that, the IRS already has all the data on your bank accounts. In fact, if you don’t pay your tax, they could levy those accounts. So, there is no point to playing hide-and-seek with your bank account info.

Adding to this bad news is the fact that more can go wrong when you file on paper and pay with a check. And, when something goes wrong, the IRS will assess the tax and/or penalties and interest that they think you owe. Once they do that, it becomes your problem to get it straightened out. Let me tell you that this is generally not the 15-minute phone call that it should be to fix some minor misunderstanding. If you can even get through on the phone at the IRS, hold times can creep into hours.¹

But what could go wrong?

Let me share a few of the horror stories that some of my tax colleagues and I have encountered:

• You mail your tax return with payment at the post office on April 15th (without sending certified or having it manually postmarked). The USPS will postmark it when it gets to the distribution center…maybe a day or two later. So, your return and payment are both already considered late by the IRS who then assesses late filing and late payment penalties.
• You mail your tax return certified and have it manually postmarked at the PO on the deadline. The IRS processes it five days later and the envelope is separated from the tax return. The IRS declares that it is late and assesses penalties/interest for late filing/payment.
• You mail your tax return and check at the post office an entire month before the deadline. The USPS loses it. The IRS doesn’t care — it never got your return or payment and will assess accordingly.
• You mail your tax return certified and early. Your tax payment check clears about 5 days later so you think all is well. Later, you discover that the check was actually stolen by someone along the way (postal worker? IRS employee? pirate?), when the IRS demands the full tax payment plus penalties and interest.
• You accidentally mail your payment check to the estimated tax address. It gets applied to your current year estimated tax instead of to the tax due on your tax return. The IRS assesses the amount you owe…again.
• You print your tax return using both sides of the paper. The IRS scanners only read the front of each page and send you a notice and penalty for filing an incomplete tax return.
• You refuse to give your bank info for direct deposit. Your refund is delayed by a number of weeks.

Some of these things are IRS errors that should be cleared up by producing proof of timely filing. Some of these are mishaps or crimes where the taxpayer is the victim. Some of these are the result of post office or IRS policies that some folks are not aware of. But in every single case, the burden reverts to the taxpayer. And every single one of these issues could have been prevented by electronic filing and payment.

So you are saying that efiling is the answer?

Electronic filing/payment is far more accurate and secure than paper filing. But, just like anything else, things can still go wrong. Sometimes tax returns get rejected and must be filed on paper, sometimes bank info is incorrect or the bank rejects a withdrawal request, and sometimes people get hacked. As a tax professional, I take great pains to make my systems as secure as possible. If you are efiling your own return, I recommend a few things to make the process even more secure:

• Request an Identity Protection PIN (“IP PIN”) from the IRS. You can do so by logging into your personal IRS.gov account.
• Use a secure internet connection to efile — NEVER efile using public wifi.
• Use tax software from a reputable source.

It is time to abandon this notion that paper filing somehow makes the IRS work harder for your money. Resistance is futile and will only create more headaches if something goes wrong.

_{This post is for educational and entertainment purposes only. I am a tax advisor, but I may not be YOUR tax advisor. So, this does not constitute tax advice for any specific situation.}

1. Plus the IRS’s phone system is sketchy. I have been on hold with the IRS for an hour only to have the call drop just as an agent picked up. ↩︎