I owe taxes on 2014 Federal tax return. I put the correct figure in on my check, but I incorrectly wrote the handwritten amount. The incorrect handwritten amount was withdrawn from my bank account so unfortunately full tax owed was not paid. I do not want to have to pay a penalty for the balance I'm still owing. How do I rectify this?
Contact IRS. In my experience, the folks there are polite and helpful. Of course, the waits are LONG now due to the massive amounts of tax fraud stuff. Once they finally get to your return, they'll probably notify you of the error.
You can't. If the system works correctly, you will be assessed a failure to pay penalty if the underpayment was large enough.
Think about it - if it was that easy, everyone who couldn't afford to pay the full amount on time would just write a check like you did and say it wasn't their fault.
The penalty will be very minimal if you immediately make a second payment for the deficiency.
Better yet, the IRS has an official policy of First Time Abatement for taxpayers who have been in full compliance with all their tax obligations for the past three years minimum. So, even if a penalty is assessed, you should be able to get it abated if you have a clean filing and payment record previously.
Finally, this is a good reason to make your payments electronically, which is now easier than ever with IRS Direct Pay through the web site.
FYI, I found the following question at money.stackexchange.com:
On 4/27/2015 11:00, Barry Margolin wrote: The Uniform Commercial Code says
There is no telling at this point if the IRS did the right thing. A clerk quickly processing a large batch of checks may have input the numeric digits without even looking at the legal line. I'd quickly pay the difference between the intended amount and the bank processed amount to minimize penalty, then wait for a notice from IRS.
The OP said that the spelled-out amount was withdrawn from his bank account, not the numeric amount. That's the right thing according to the law. That's why he has to pay the difference with another check.
I agree that the bank handled it correctly, but I've seen the Service give credit for the numeric amount even when it differed from the legal line amount. Makes a mess to reconcile.
Shouldn't they give credit for the actual amount paid?
Of course they should. But the IRS is going to key in an amount to the taxpayer's account when they receive the check, several days before the bank processes the check. If they input the digital numeric amount and the bank later pays the lesser legal line amount, it's going to take some time before the mismatch is reconciled. "Some time" in IRS terms, could be days, weeks, or months.
I wonder if an organization that processes the quantity of checks that the IRS does actually goes through the process of sending the checks to a bank. I wouldn't be surprised if they act as their own clearinghouse. So depositing the check and updating the taxpayer's account are done by the same data entry.
In fact, does the IRS actually have an account in any commercial bank? Or do they just deposit directly into the Federal Reserve?
That's an interesting question. I hadn't thought so. But looking at a refund check, the bank number listed at the top of the check is 15-
Bank 15-51 is the US Treasury. So apparently they have their own Fed account, and in effect run their own bank.
Well, it may involve long waiting, but a novel idea --- call IRS and ask!!
When only 43% of people can get through to someone at the IRS, even if they want for 30 minutes or more, that's not necessarily a realistic alternative.
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