State: Income tax payment demands were sent in error
Officials say government, tax prep software both at fault for late transaction processing
Nobody really enjoys paying income taxes.
But being asked for the money twice in one year? That’s especially galling.
Just ask Irving Dietz, an 80-year-old Santa Fe resident who on Wednesday received a state Taxation and Revenue letter stating his tax payment was past due, and by the way, he owed a penalty and some interest, too.
The letter was dated May 3 — four days after April 30, the day Dietz expected the state to draw the money he owed on taxes he’d submitted using a tax preparer.
“Of course we were upset,” Dietz said Thursday. “We thought maybe they hadn’t received it for some reason.”
But when Dietz checked his bank account, he found the money he owed had in fact already been pulled, albeit on May 1, a day after electronic payments were due — and a day after his tax preparer had told him to expect it to be withdrawn. Dietz is not alone.
A number of New Mexican taxpayers who apparently tried in good faith to get their payments in on time have received letters like Dietz’s, informing them they’re on the taxman’s naughty list.
New Mexico Taxation and Revenue Department spokesman Charlie Moore said there appear to be two culprits: the state tax department itself, and Intuit, the company that owns TurboTax, a home tax preparation software.
While tax day for individuals is April 15, those who file and pay income taxes electronically have an extended filing
deadline of April 30.
Moore said a programming error led his department to send out assessment letters to a number of taxpayers who had filed their taxes on time and had scheduled their payments to go out on April 30.
“The programming for sending out assessment letters didn’t take into account the extended [deadline], it appears,” Moore said.
In a written statement, Department Secretary Stephanie Schardin Clarke apologized for the heartburn caused by the error.
“We sincerely apologize to taxpayers who received the penalty and interest letters erroneously,” she said in the statement. “We know it likely caused some unnecessary anxiety, and we’re very sorry for that.”
Meanwhile, Moore said the second issue appears to have come from Intuit using the wrong date in its software. Those affected used an Intuit product like TurboTax, filed and paid taxes electronically and planned to pay on April 30. Instead, Moore said, the company actually submitted those payments May 2.
Taxes paid late because of the Intuit error are still viewed as late in the eyes of the state, Moore said. The department is still working with Intuit to figure out what comes next for people affected by the company’s mistake. Intuit customers do not need to take any action at this point, he said, and should be hearing from the company.
Intuit, which also owns professional filing products like Lacerte and ProFile, did not return a call requesting comment.
Taxpayers who received the letter because of the state’s mistake also do not need to take any action, and will not be penalized or charged interest.
For now, some Santa Fe tax preparers say they’re trying to communicate good information to their clients.
“People are just concerned and confused,” said Mary Silver, a certified public accountant. “The state will straighten it out, but it just causes an awful lot of confusion and anxiety.”
Jan MacKinnon, another longtime local CPA, said she’s heard from clients who are worried they’ve done something wrong or whether they should be doing something to fix it.
“Some of them owed a lot of money,” MacKinnon said. “A couple of them owed $5,000 or $6,000.”
Pete Doniger, owner of Tax Help Santa Fe, said he’s urging people to get signed up for a Taxpayer Access Point account on the state website, which Moore said “should reflect reality,” and to be patient.
“If you know that the money you were supposed to have drawn happened, and it was before May 1, then don’t worry about the letter,” Doniger said. “… Sit back and let the dust settle.”
Santa Fe CPA Jolonda Field said she suggests taxpayers take the extra step of contacting their tax preparer if they receive a letter or think they’re being erroneously charged for a late payment. She said a recent experience with one client has made her doubt whether the state portal really is up to date in all cases.
The client, who owed more than $10,000 in taxes this year, was scheduled to pay them online April 30, Field said. A day or so earlier, though, the client logged in to her Taxpayer Access account. It didn’t just say she owed the tax amount, Field said; it said she was racking up interest and had been charged penalties for being late with her payment.
“She scheduled that payment and then sent us an email upset,” Field said. “… New Mexico ended up drafting that money twice.”
While it’s not clear if Field’s client was affected by the two problems the state has outlined, she said it’s good practice to check in with a professional before making any additional payments.
“They’re going to refund one of [my client’s payments], but still it’s a lot of money to take out of someone’s account,” Field said. “We would have advised them not to do anything until we knew what was going on.”
Field said she also hopes to see the state issue letters correcting all the erroneous notices.
“It’s not very efficient and not a very good use of our time,” she said. “We end up having to bill our clients for extra time. It just doesn’t seem very fair.”
Moore said he wasn’t sure the state would be issuing that kind of blanket correction by mail.
He also cautioned that while many of the letters were errors, some likely were not.
“They need to make sure in fact that they paid because if they didn’t, then the letter is not erroneous,” Moore said.
After receiving his letter, Dietz said he chose a proactive route. He called his tax preparer, who informed him the problem was more widespread, then sat down and drafted a letter disputing the assessment — noting the payment had been made in full and asking the penalties be removed.
“Put it in the mail today,” he said.