What to Tell Your Clients Who Are Late to the Filing Party

It’s late filing season and there are roughly 40 million taxpayers that have yet to file their taxes. Are some of your clients included in that number? Here are some things to communicate to clients regarding extensions.

Automatic ExtensionsFiling-extensions

There are some taxpayers in special situations that qualify for automatic extensions. That’s right, they don’t even have to ask! Taxpayers who qualify include:

  • Victims of natural disasters
  • Military personnel in Combat zones
  • Taxpayers who live and work outside the U.S. and Puerto Rico

If any of your clients qualify, make sure to let them know they have extra time and encourage them to make an appointment before their specific deadlines.

Clients Who Owe the IRS

Your clients may have extra time to file, but you should urge them to pay the estimated tax as soon as possible. Currently, the interest rate is 4% per year, compounded daily, and the late payment penalty is 0.5% per month. That adds up quickly.

The IRS allows you to submit an estimated tax payment when you file form 4868 (Application of Automatic Extension of Time to File U.S.) to get an extension. IRS Direct Pay allows taxpayers to submit estimated tax payments for free. Any payment made with an extension request will reduce or eliminate the interest and late payment penalties associated with payments made after April 18th.

Reaching Out to Late Filers

Record numbers of Americans waited until the last minute to file their tax returns this year and many of them filed extensions instead of the completed returns. These taxpayers still need to file their 2016 returns. Others could need to file amended returns because they rushed through the last-minute process.

Seize the opportunity to get in front of them.  Communicate now; don’t wait until the Oct. 15 deadline approaches.  Here are some ways to reach out to late filers:

  1. Pick up the phone. Give your clients a courtesy call to remind them that they need to come in to file their taxes.
  2. Email. Send personal email reminders to clients you still haven’t heard from reminding them of the deadline. Make sure you include information about penalties and about what they need to bring with them to their appointment.
  3. Send an email newsletter with information about filing extensions and amending returns. Educating clients is important. Encourage your list to share the information with friends who may need to amend or still need to file. Remind them of your referral program if you have one.
  4. Post information about filing after the deadline to all of your social media channels to catch clients there or pick up new ones.

Tax season is not quite over yet! Make sure you’re continuing to educate clients and keep driving late filers through your doors.