Why I didn’t file US Income Taxes – and what happened

This short story is an addendum to the blogpost by Greg Dewald on “Why you’re not filing your US income taxes“:

Because my income was all earned abroad, (F2555 for the insiders), I did not have to pay US taxes while living overseas. I did, of course, file and pay taxes in the Netherlands, where I lived.

It was enough of a chore for me to get my Dutch tax returns filed, so I tended to let my US return hang around on the “I’ll do that on Saturday” list.

Well, during the early years of this new millennium, that Saturday never came. And during that time, we moved. Because I didn’t file my US tax return, the IRS never got my change of address, either.

My bank account was, of course, more important to me than the IRS. So I had informed my bank of our new address, and I was getting statements from the bank regularly.

So out of the blue I got a letter from the bank:

THE IRS HAS PLACED A LIEN ON YOUR ACCOUNTS DUE TO UNPAID TAXES. YOUR ACCOUNTS ARE EMPTY.

I called the IRS immediately. They had filled in my tax returns for me, and the very kind man informed me that when the IRS does that, they give all possible benefit to the US government, so that the taxpayer is assessed with the maximum amount of taxes.The taxpayer must then actually file and show what is the correct tax assessment.

When I didn’t pay – explained in part by my change of address – they placed a lien on my bank accounts, cleaned them out, and informed me that I still owed them more money.

Well, needless to say, I filed my returns for those six years of laziness, and eventually got my money back.

Actually, it went pretty efficiently.

AND – I earned about $250.00 in interest!

But don’t take that as a reason to be lazy.

The hassle, stress, and lost hours spent recouping those year of financial records cost me far more than $250.00.

Although I could not suppress a small smile when I saw the statement.