This year has presented itself with a new challenge with taxation authorities: Proper application of your tax payments!

Never before have we seen the abundance of notices, primarily from the Internal Revenue Service, stating that they have not received your tax payments. These include quarterly estimated payments as well as balances due with your income tax returns.

Here are some helpful tips to ensure the best chances possible of having the tax authorities properly process your tax payments.

1. Unless you have a C Corporation, all income tax payments are PERSONAL and need to be posted towards the PRIMARY TAXPAYER’S social security number. If the payment is coded to the spouse’s social security number, it may delay or prevent proper application of your payment. Please consult your prior year return to ensure you are reporting under the primary taxpayer identification number (the first person listed on your personal income tax returns).

2. Whenever possible, submit your individual tax payments via the online direct debit system. The IRS and most states have these portals set up. While the IRS is not available at year end when they do their switchover to the following tax year, it is the most efficient way to get your payments posted. Be sure to download and save the payment verification as well as your bank statement where the payment cleared. This way, should there be an issue with your payment, you can easily provide support for your payment.

3. When making tax payments, please DO NOT use bill pay from your bank. This makes it more difficult for the tax authorities to match your payment to your account, and it will most likely result in notices indicating that their record of tax payments does not match the tax return that we submitted. It also prevents the ability to submit a payment coupon with your payment.

4. When paying by check, please be sure that the following steps are made:

  • Submit your payment with a payment voucher, whether it is an estimated tax payment or year end payment. This ensures that your payment is properly applied to your account. If you need a payment voucher, we are delighted to provide you with one.
  • Pay from a personal check, not a business check whenever possible. If your check and voucher are separated, it gives you a fair chance at the payment still being applied properly.
  • Write the primary taxpayer’s social security number in the memo line, along with the payment type and tax year (ex: 1040ES, 2021, Q4).
  • Always send your tax payments via USPS Return Receipt and save the returned postcard when received. This is the best proof of mailing and receipt available and may be necessary to produce if your tax payment is not applied.
  • Always photocopy your check and voucher before mailing, and save the return receipt postage receipt that you will get upon mailing your payment.

While none of these steps suggest a guarantee of payment and proper application of your payment, they are the best defense we have in assuring the proper application and proof of your payment.

Thank you as always for allowing us to be your trusted advisors!