What is the first thing you associate with moving? Moving vans? Changing utilities? Getting to know your neighbors? Changing your address with the USPS?
What you should associate with every move is letting the government tax agencies have your new address! I know what you are thinking, “I’ll file my yearly returns and that will be plenty of notice.” Actually, that is not good enough in the eyes of the Internal Revenue Service (IRS) or the California Franchise Tax Board (FTB).
If no notice is filed with the IRS, and it is determined that there is an issue with your return, this could cause you a great deal of trouble. Perhaps there was a 1099 you forgot about, or the IRS wants to audit your return. A notice is sent to your OLD address, the address on the return you filed for that year. “The USPS will forward it, ” you say. Interestingly enough, there are some ZIP codes from which there is no forwarding (90027, for instance). Forwarding orders expire, faster than you would believe. I personally would not want to trust my financial future to the efficient workings of any government agency. It is akin to playing Russian Roulette!
If the USPS does NOT forward the IRS letter, the IRS computer data base is checked for an address change. If a change is noted, the letter is re-sent to your new address. If not, the next letter is again sent to your OLD address, proposing a change in the tax you owe. The next letter will be a “notice of deficiency” which, if not replied to correctly within 90 days, leads to an additional tax payment for you; the assessment is usually final. You have forfeited your right to appeal, even if you did not actually owe the additional tax! Trying to straighten this out is time consuming and chancy.
Of course, once the file is sent to collections, that branch can almost ALWAYS find your address! By then the only conversation you are having is “by when must I pay?”
How does one prevent this from happening? The IRS has provided a sure fire way of registering any address changes - Form 8822. Our office can prepare one for you and send you enough copies for all relevant tax agencies. It needs to be sent to the IRS and any state tax agency (the FTB accepts the IRS form, most states should). Send certified mail, return receipt requested, of course.
And the IRS will never have to wonder why you do not respond to their letters. And you won’t have to wonder if you will get a dunning letter demanding a tax you did not know was due.