Dispute Over Late Filing Penalty Interest: IRS's Use of Check Cashing Date to Infer Receipt Date Raises Questions
A tax practitioner this year filed returns for a few clients for a fee, and despite clients submitting returns and paying taxes on time via certified mail with return receipt, they received penalty and interest notices from the IRS. The IRS insisted on the penalty interest even after clients showed proof of mailing, citing a two-month delay in check cashing as evidence that the mail was late. This case raises questions about the IRS's handling.
Although tax filing is not currently my main business, this year I did handle tax preparation for several clients for a fee. We received a letter from the IRS listing penalties and interest for failure to file and pay on time—even though my clients sent their returns via certified mail with return receipt requested. We submitted the full documentation, including proof of mailing. However, we just received another letter showing the same penalties and additional interest, so the client called the IRS. The representative said that even proof of mailing would not help, and the penalties and interest would still be charged, on the grounds that the IRS did not cash the check until two months later, so it 'must have been late.' I have never heard of such a claim. Has anyone else encountered such an arbitrary presumption?