When Paying IRS, Leave No Doubt

Fred A. Windover included a check and his return in the same envelope. The amount of the check was the exact amount due on his return. The IRS applied some of the check to Windover's other past-due amounts and then later assessed penalities for not paying his taxes in full. The Tax Court ruled if a check doesn't specify the tax year, the IRS can apply the funds "in the order of priority that the Service determines will serve its best interest."

The moral? If you owe taxes, write the tax year and form on your check. Better yet, e-file and have the balance due direct-debited from your bank account. That leaves no room for the IRS to lose your check or put it where it doesn't belong.

Joe Kristan Roth & Company CPAs