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Failing to change mailing address leads to trouble for taxpayer

On Sunday, we discussed a few tips for California businesses that outsource the handling of employment tax duties to third parties. Today, we have an ever more basic--yet critical--tax hint for businesses and it applies whether taxes are outsourced or completed in house: if you move, tell the IRS.

Although this sounds very simple, many business in California as well as individuals may not realize just what is required to officially change an address and what can happen if one fails to do this correctly.

Business Management Daily recently discussed the case of one taxpayer who made the mistake of failing to give the IRS his new address.

The taxpayer was using a P.O. box until July 2005, when he asked the post office to begin forwarding his mail to his new address. In the spring of 2006, the IRS pursued a lien for unpaid taxes and the taxpayer argued against the lien, saying that he was not properly notified because the IRS mailed all correspondence to the P.O. box and not his address.

A tax court ruled in favor of the IRS, finding that the IRS is required only to mail notices to the last known address of a taxpayer. The receipt of said notices is not required. A taxpayer's last known address, the court said, is that which appears on the most recent tax return unless the IRS has been clearly notified of an address change.

Business Management Daily suggests that in order to avoid such issues, taxpayers may be wise to change their addresses by filing an actual change of address card with the post office as well as filing Form 8822-B with the IRS.

Source: Business Management, "Moving? Remember to tell IRS," July 18, 2013