I paid my taxes on time but I still got a letter. Are they trying to rip me off?

Question

The check I wrote to my state for 2007 state taxes cleared my bank in January. I got a letter saying I did not mail it in time and they are charging me penalities and interest.

I called them and they see that they processed my check in January. The person I talked to said "that is weird". She is going to talk to her supervisor to find out why I received the letter and let me know.

Do you think this is some kind of way to get more money out of people who won't investigate?

Thanks!

Answer 1

nope just sounds like a computer error...  send them the letter and a copy of the cancelled check and write paid in full  january 08 on the letter...  they'll fix it.

Answer 2

I second Judy's thought.

You need to determine which penalty you are being charged.  This could be either a failure to pay penalty or an estimated tax penalty.

A failure to pay penalty is charged when the money isn't paid until after the due date of the return.  If you can show you did pay (the cancelled date on the check), you are off the hook.

An estimated tax penalty is completely different.  It means that while you paid your taxes by the due of the return, you owed enough money that estimated tax payment rules applied and when they do, you were to make the payments 4 times during the year, paying 25% each time.  (The due dates are often April, June, September and January of the following year.)  If you skip payments or pay too little each time, you can trigger the estimated tax penalty.  The penalty is often waited by the number of days "late."

Answer 3

Which state?  And was the amount more than might subject you to underwithholding penalty (which varies by state for state taxes)?

Answer 4

No, they aren't trying to rip you off, somebody just screwed up someplace, unless they are saying that you should have been making estimated payments and didn't - if what you owed at the end was $1000 or over, then you probably DO owe penalties and interest for not making the estimated payments - you can't just wait until you file to pay it.  If your check was $1000 or more, that's most likely the problem.  Read the letter carefully and see what it REALLY says.

Answer 5

No one is perfect.  With a copy of the check, the state can trace where the payment went and apply it to your account.