What to do when you receive a check from the IRS (or state taxing agency) that you are not entitled to
This happens more frequently than you may be aware of — when you receive your business or personal mail and there is a check from the IRS or your state taxing agency. Great, except you were not expecting a refund. The common reaction is to deposit that check into your bank account. However, if you are not entitled to this refund, doing so may result in the imposition of penalties and interest — and even worse sanctions, in some cases.
In my 30 years of experience, the main cause of an IRS check being issued improperly is due to a tax deposit being posted to the incorrect period. This can be an estimated, payroll or excise tax deposit that for whatever reason is posted to the incorrect period, generating an overpayment. This, of course, then generates an offsetting shortfall in the period that the payment was intended for.
So what to do when this happens? Contact either Chuck or Cristina in the Des Moines office. We will help you research the issue to determine if you are entitled to the check. If the check was improperly issued, we typically instruct our clients to void the check and send it to us. We then forward the voided check to the IRS with instructions as to where the IRS should post those funds.
By doing this, you will avoid any penalties or interest charges. Should you deposit a check that you are not entitled to — even if a replacement check is sent — the IRS will still impose penalties and interest. That is why it is important to contact us prior to depositing the check if you have any question as to whether or not you are entitled to the funds.
We are happy to assist you if you ever receive a check that you are not sure you are entitled to, or with any other tax related issues. Please contact either Chuck or Cristina in the Des Moines office at (515) 270-1446.
