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American Morning
'Smart Money' Writer Discusses Folly of Procrastinating Tax Filing
Aired April 16, 2001 - 10:28 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: We've got some pretty interesting numbers there. The tax man cometh for many Americans today. The deadly filing deadline is midnight tonight, but an estimated 26 million people still have not filed their income tax forms. So what is up with this procrastination?
Our guest this morning is Vera Gibbons, and she can answer that for us -- I hope. She's a financial writer from "Smart Money" magazine, and she joins us from our New York bureau.
Good morning, how are you?
VERA GIBBONS, "SMART MONEY": Hi, Leon. Good, how are you?
HARRIS: I'm all right; I survived. I got mine in on time.
GIBBONS: Good for you.
HARRIS: Barely -- I have to admit I got mine in Saturday.
GIBBONS: That's cutting it close.
HARRIS: It is. And I don't know if I should be asking you or a psychologist, but why is that we do this every time? Those of us who are procrastinators do the same thing every year.
GIBBONS: It's not exactly a fun thing to do. People liken it sort of going to the dentist and getting a root canal. Secondly, people who file late generally do owe the government money, so why not put it off?
HARRIS: A lot of people, though, are expecting to get money back.
GIBBONS: Not the people who file this late, though. People who file this late generally do owe the government money.
HARRIS: Of the numbers that we just looked at coming into this interview -- 129.6 million -- how many, would you say, are filing today?
GIBBONS: Twenty percent are filing today, generally.
HARRIS: No kidding?
GIBBONS: At this point, you've really got to put in for an extension. Fill out form 4868, and you've got yourself an additional four months. You'll have until August 15 to get it together. Keep in mind that you're filing an extension to file -- this is not an extension to pay. If you owe the government money, you've got to pay them your best estimate of what you owe by midnight tonight, or you're going to be hit with penalties and late fees.
HARRIS: For those who are not paying, who may have something coming back and are filing that late, aren't they really messing themselves up big time, because all of a sudden, they've got this big lump that gets into the pipeline, and now that they will get something back, it won't come back for months?
GIBBONS: They sure are.
If you can't pay what you owe, your best bet is to put is a request to work out some sort of an installment plan. The government will happily accept that. They want their money.
HARRIS: A lot of people say that the reasons why they do these things so late is because they need extra help and they just don't get around to doing that.
GIBBONS: Exactly.
HARRIS: But then they complicate the problem by trying to get onto one of these hot lines.
GIBBONS: Right.
HARRIS: Is there any hot line right now that you can still actually get through on?
GIBBONS: There's the IRS hot line: 1-800-829-1040, but it's largely an automated number. If you need help, your best bet at this point is to run out and buy TaxCut or TurboTax, or hit the Web: jklasser.com, irs.gov, quicken.com -- there are plenty of Web sites available that can help you. But again, I would suggest filing for an extension at this point: Form 4868 is the way to go.
HARRIS: Yes, but then again, if you file the extension -- if you do owe -- you still have to pay.
Do you have to pay the whole thing, just part of it, or what?
GIBBONS: You should come as close to paying as much as you can. Otherwise, you're going to be hit with an 8 percent compounded interest fee. So it's in your best interest to pay as much as you possibly can.
HARRIS: But isn't this now the kinder and gentler kinder IRS. Won't they cut you some slack on that?
GIBBONS: No, the deadline is today. Unless you live in New England or parts of upstate New York -- Patriots' Day gives an extra day -- or in a designated disaster area -- New Mexico residents get another nine months because of the wildfires they had last summer, and Washington state residents do get until the end of this month because of the Seattle earthquake they had back in February -- today is the deadline. You've got to get them postmarked and in the mail -- send them registered or certified mail -- by tonight at midnight.
HARRIS: I've got to guess that a lot of people -- I know that the numbers are up this year for those who have filed electronically -- I've got to think that today there's got to be a ton of people who are trying to get through it and do that today. Are there any expected problems with that, with so many people rushing the system at once?
GIBBONS: It's going to be very congested. Also, if you need forms, your best bet at this point is to go to irs.gov and download what you need. The lines at the banks, post offices, and libraries are just outrageous -- at least here in New York, anyway.
HARRIS: Yes, surprise, surprise.
Is there any other advice you'd like to pass on today?
GIBBONS: You want to double check everything, make sure you've done the math correctly, make sure you've taken advantage of all the deductions you're entitled to. Sign and date your return. And again, get it in the mail: certified or registered mail by midnight tonight, or you're going to be hit with late fees.
HARRIS: Here's one that can make you $1 million, if you can answer it: Give us the one tip that will guarantee that we'll never get audited.
GIBBONS: So you'll never be audited? Be honest. Honesty is the best policy.
HARRIS: Well, we'll have to take you up on that one.
Listen, thanks for the advice this morning, Vera Gibbons, and happy tax season to you. We'll talk to you next year, all right?
GIBBONS: Thanks, Leon, it sounds good.
HARRIS: Have a good one.
GIBBONS: Bye.
HARRIS: See you.
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