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A CFP® wrote a bad IRS check. That would be me.

Yes, I bounced a check to the IRS.

Accidentally, of course, but still. Behind my name are the initials “CFP,” for CERTIFIED FINANCIAL PLANNER™, so supposedly I’m some kind of financial expert. And yet, I did a very un-expert thing that even most financial non-experts do not do.

Brain Fog

The bad check was written in April 2014. The tax year in question was 2013, which was the same year I got an unexpected biopsy (which came out clean after several weeks), an unexpected audit by state regulators (which came out clean after several weeks), and an unexpected divorce (which took “only” several weeks and much of it wasn’t clean). All of these – the biopsy, the audit, and the unexpected divorce – happened between August and November.

If you’ve ever been through one or more of the above, perhaps you can relate to the feeling of going through the rollercoaster of life, trying to act like a rational person, but constantly getting hijacked by these human things like emotions.

Wishing you could concentrate better, focus like you used to, but the brain just won’t cooperate.

I wasn’t aware I was in that much of a fog. I thought I was keeping it all together pretty well, considering.

Until the IRS notice showed up.

“Check Payment Not Accepted By Bank: The bank did not accept the enclosed check for the following reason: INSUFFICIENT FUNDS. Please return the bottom portion of this form with a certified check…The PENALTY amount is…The current Interest Charge is...”

Shock and Shame

“Wut?” I thought.

My first reaction was to get mad at the bank. It only took a few minutes, though, to research there was no mistake. Shock, embarrassment, humiliation, shame. My jaw and knees dropped to the floor simultaneously.

I bounced a check to the IRS?!?

That’s when it dawned on me that the events of 2013 were still affecting me or I wouldn’t have written a check on one of my new post-divorce checking accounts without putting any money in it first.

So, the next paragraph caught my eye.

“You can request penalty relief by explaining why you believed the bank would accept the Check and by providing any supporting evidence.”

My backbone straightened up. Although it was not the bank’s error, I needed to plead my case to keep my sanity.

Making the Case for Penalty Relief

It turns out the IRS (back then) would seriously consider applications for relief, although that doesn’t mean they will grant them.

First, I immediately deposited more money in the account and had the cashier’s check, including the penalty and interest, sent.

Then, I sat down to write to the human who would be reading my request. I crossed my fingers that it would be a 40- or 50-something who had been unexpectedly divorced after a 20+ year marriage and perhaps had a biopsy scare plus an audit of some kind. I fell on my sword, admitted the mistake, and explained the temporary loss of rational thinking.

I got a partial waiver, which left my backbone and sanity somewhat intact.

The notice, however, was a wake-up call that I was under more stress than I knew. I made a conscious decision not to add to it and doubled-down on the ol’ self care regimen for a while.

Corresponding with the IRS

If you ever have to correspond with the IRS, remember that the first response you get might be before they have fully processed everything. Give it a while before thinking the matter is concluded.

For example, I sent my letter on May 22, 2014. On May 26, 2014 I received a notice which said:

“You have unpaid taxes for 2013” which showed the amount due, plus the following:

“Failure to pay proper estimated tax penalty – $58.00

Dishonored payment penalty – $65.54

Failure-to-pay penalty – $32.19

Interest charges – $10.87“

Because they had cashed my cashier’s check by then, I decided to wait. Maybe they hadn’t read my letter yet.

On June 12, 2014:

“Thank you for your inquiry dated May 22. We have accepted your explanation of why the bank didn’t accept your check…and we removed the penalty.”

Whew, ok. Sigh of relief. Will they actually refund all the penalties I had included in the cashier’s check, or what? Again I decided to wait.

On July 2, 2014:

“We received one of the following items from you on May 27, 2014…We’re working on your account…we need an additional 45 days to let you know what action we are taking… You don’t need to take any further action now…“

Huh? I thought they already took action? What did this mean? Are they not granting relief after all? Rather than go down the ol’ worry rabbit hole, I put it aside.

On July 18, 2014:

“Thank you for your recent letter dated May 22 that asked us to remove the penalty for failure to pay…We are pleased to inform you that your request to remove the penalty has been granted. However, this action has been taken based solely on the fact that you have a good history of timely filing and timely paying. This type of penalty removal is a one-time consideration….”

The final notice, on August 4

“Changes to your 2013 Form 1040: Decrease in failure-to-pay penalty. You are due a refund of $32.19.”

So, I didn’t get all the other fees/penalties waived. No sympathy for the divorce part, but appreciation for the 30+ years of paying on time.

In the future, should I ever need to ask for relief or advise someone else to, I’ll emphasize the paying-on-time part.

Well, by then it didn’t matter anymore. I had advocated for myself and received a compromise. It wasn’t worth another minute of worry or effort. Heck, I was just glad I hadn’t bounced checks to anyone else that year.

The Bottom Line

Nearly all of us will have a time in our lives when our brains get discombobulated – divorce, death, health issue, job loss, new baby, relocating, and/or retirement. When we mess up, it’s important to:

• let the mind rest,
• go easy on ourselves, and
• be strong enough to ask for help and forgiveness.

Even financial “experts” make financial mistakes. And sometimes, even the IRS respects that.

For more mistakes I’ve made so you don’t have to, subscribe to the award-winning monthly e-letter, “The View from the Porch,” or see the book, The Mindful Money Mentality: How to Find Balance in your Financial Future.