Why people put off tax filing

The tax clock is ticking, but millions of filers keep hitting the snooze button.

This tax season, the Internal Revenue Service is expecting returns from 135 million taxpayers. But through mid-March, the agency had received just over 67 million forms, down slightly from the previous year's pace. That means a lot of returns are still on the back burner.

Naturally, people who owe delay filing (and paying) until the last possible minute. But tax-filing procrastination isn't limited to just them. Accountants report that even clients who are getting money back often put off the inevitable.

"I have those crazy people," says Bob Oberstein, a CPA and personal financial specialist in Sherman Oaks, Calif. "There's a guy who gets money back and waits to file the return until October. I think it's really great that (people like that) are reducing the national debt by letting the government use their money."

Neil Becourtney, a tax expert at J.H. Cohn LLP, a large consulting and accounting firm, theorizes that people put off filing because it's such an unpleasant experience that requires a whole year of recovery time.

He also notes a common misconception that if a return is filed on the April deadline it's less likely to be audited because of the flood of returns that come in at that time. "If there are enough red flags on the tax return," says Becourtney, "it will ultimately get picked for an audit whether it's filed in February, April or October."

Another reason people put off filing, he says, is because they don't have the money to pay the tax. Bad idea.

"Anyone in this situation should file their tax returns even if they are unable to pay one dollar of a balance owed," Becourtney says. The penalties for late filing and late payment can be quite high, and you can always work out a payment plan. In extreme cases, a taxpayer can even negotiate a lower amount by making what's called an offer in compromise.

Another possible reason for putting off filing, Becourtney says, is that most people's investment portfolios or retirement accounts took major hits. The process of going through all the statements "may just make people sick to their stomachs."

Psychological filing impediments
Eli Bortman, a tax attorney who teaches at Babson College in Massachusetts, says that there have been times when he's had his taxes done for weeks but didn't file until just before the deadline. One reason for waiting: worry that if he files early, he might miss something that could have made a difference.

"Subconsciously, I guess I'm thinking, 'What if I file it today and between today and April 17, I suddenly think of some deduction I forgot to include?'" he says. "It could involve an amount of money that's too small to ignore but not large enough to justify filing an amended return."

If anyone understands the behavioral issues surrounding filing procrastination, it's Tina B. Tessina. A corporate accountant for 15 years, she's now a psychotherapist and author of 11 self-help books.