I won't have the necessary funds to pay my six-figure taxes until April 16th. Am I going to jail?

April 9, 2009 4:03 PM

My funds to pay my (large) tax bill might not clear into the account I transferred them to until April 16th or 17th. What can I do to prevent the IRS from getting angry that they can't do the desired electric withdrawal on the 15th itself, or my bank getting pissed that the IRS trying to withdraw funds that just aren't there (yet)?

An LLC I co-owned was sold in January 2008, and it's time to pay the taxes on that sale. My total tax liability between two states and federal is in the low six figures, easily the highest tax bill of my life to-date (and possibly ever?).

I'm away from home without my checkbook. My accountant plans to e-file on my behalf on 4/15, giving the IRS my bank routing information to get the payment.

I finally learned the amount owed today, and immediately transferred funds to my bank to cover the tax payment. But with tomorrow being a "market closed" day, the institution where I initiated the transfer won't "start" it until Monday, and it needs 2-3 business days to clear. So, everything might click into place on April 15th. But the funds might not be available until the 16th or 17th.

What do I do?

posted by lexfri to Work & Money (8 answers total)

Best answer: Ask your accountant. It may be better to mail in a paper return as it will take some time for the IRS to process it.

Failing that, can you do a same-day wire transfer instead of the slower transfer you initiated?
posted by grouse at 4:08 PM on April 9, 2009

Has the accountant already sent your bank routing info to the IRS?

If not, you may be able to get your bank to provide temporary paper checks, like those you get when you first open an account (assuming you're in a location with a branch). I lost my checkbook once out of town and they did that for me. Then submit your payment on April 15th and let the USPS do their magic.
posted by joe vrrr at 4:13 PM on April 9, 2009 [1 favorite]

Response by poster: I'm not sure that I can do a same-day transfer. But -- holy moly -- mailing in the tax form seems like a brilliant solution. That would mean the accountant needs to overnight me the forms to sign, and then I mail them from here on the 15th. Sounds painless enough.

Thank you, thank you, thank you.
posted by lexfri at 4:19 PM on April 9, 2009

Couldn't you write 'em a check?

On preview: grouse, you did it again!
posted by box at 4:54 PM on April 9, 2009

Indeed, that's what check kiting was invented for...
posted by gjc at 5:42 PM on April 9, 2009

Wire the money to your credit card and pay by cc. Call the card company. I know someone who claimed to have done a 6 figure payment on his Amex in order to get the points. Amex was cool after he alerted them.
posted by JohnnyGunn at 7:31 PM on April 9, 2009

One of several straightforward by-the-book options is applying for a short-term installment agreement using either the Online Payment Agreement or Form 9465. If the taxes owed are less than $25,000, you can use the OPA to request an extension of up to 120 days with no fee.
posted by dhartung at 11:23 PM on April 9, 2009

To elaborate on grouse's brilliantly retro solution of mailing instead of e-filing, you can probably gain another day or two of safety margin by FedExing your return to a friend in California, and having the friend drop it in the mail there on the evening of the 15th, addressed to the East Coast IRS center you need to mail your return to (assuming by your profile you are in NJ). If you mail it in NJ on the 15th, you run the smallish risk of the post office actually getting it to the IRS next day (since those places have their very own ZIP code), and of them trying to cash the check on the 16th.
posted by beagle at 7:17 AM on April 10, 2009 [1 favorite]