I accidentally wrote a large check to the IRS which exceeded the amount in my bank account. What can I do?

Well, if you realized your mistake immediately after you mailed your check, your best recourse is to find a way to replenish your bank account before the IRS processing center receives its mail. But, if you grasped your error three days after you mailed your check, there's not much you can do: either the IRS has already tried to deposit the check, and received an “insufficient funds” notice from your bank, or you're in a gray area where the IRS hasn't yet cashed the check, but you still don't have the means to plump up your checking account.

In the latter case, it may be possible, under certain circumstances, to have your bank issue a “stop check” order on the check you mailed to the IRS. This will cause a certain amount of confusion (as you can well imagine!), but it may at least allow you to avoid the IRS penalty for bounced checks, which amounts to two percent of any check over $1,250. (It also will spare you any penalties from your bank, aside from the “stopped check” processing fee).

Keep in mind, too, that if you mailed in your return at the last minute (say, the morning of April 15), a stopped check or a bounced check will count as no check at all in the eyes of the IRS, and you will be subject to a penalty for late payment of your tax debt.

The lesson here is: whenever you send a check to the IRS (or any other government body), always be sure you have enough funds to cover it, lest you be snagged in the gears of a vast government bureaucracy.

Are you in a difficult tax situation? Call the Oklahoma tax experts at Travis W. Watkins, PC (800-721-7054) to learn what we can do for you!