By Clyde Noel

Town Crier Correspondent

taxes

File an extension, but don’t rush it, experts say

If you haven’t paid your taxes by now, the damage control begins.

When clients show up at Alan Swanson’s office after April 1, expecting to start their taxes from scratch, “I usually tell them we’ll try to have it finished by April 15, or we’ll file an extension,” said the certified public accountant. “I don’t like extensions, but when you rush things through, you can make a lot of errors.”

Procrastination is the common reason for missing the April 15 deadline. Then individuals start looking for help.

Because of citizen pressure, the new, kinder, gentler Internal Revenue Service will work with taxpayers to arrange a reasonable plan to pay back-taxes and stay current before invoking extreme penalties.

The government provides an effective incentive to file for an extension for four months rather than miss the deadline. There are hefty penalties for failing to file on time, 5 percent of the tax owed for each month the return is late.

The IRS requires companies to send out a W-2 form to each of their employees and to the government by Jan. 31.

The form reports wages earned and taxes withheld during the previous tax year.

Nicholas Hordin, Los Altos enrolled agent, said this year presents a new challenge for former employees of dot-com companies who went out of business in 2001. Many of the former employees didn’t receive a W-2 and must reconstruct their wages and withholding from their own records.

Another complication is caused by W-2s issued by dot-coms which include income checks that bounced at the bank.

Sometimes, the IRS has a record of the amount of the withholdings even when the companies haven’t issued a W-2. In that case, Swanson said the taxpayer should file a return based on his own records for his protection.

If you filed an extension you have until Aug. 15 to file the return but Swanson suggested not to leave the return until summer because the longer you put it off, the more stressful it becomes.

The IRS can waive a late payment fee if you show reasonable cause. If you file and you still don’t have the money to pay, you can usually work out an installment payment plan.

Swanson said whatever you do, don’t ignore the IRS, as it can lead to the IRS taking extreme measures.

The IRS advises if you haven’t paid your taxes, contact them and explain the situation. They will guide you to what they will be able to do based on the amount of the delinquency and your ability to pay.

There is a big difference between tax avoidance and tax evasion. The IRS and the Justice Department are on an aggressive campaign to crack down on tax evasion.

Useful telephone numbers for late tax filers include: IRS, (800) 829-4477; Hordin’s Income Tax Service, 949-5080; and Alan Swanson, CPA, 948-7180.