LV makes top 10 list for late taxes

If death and taxes are life's only certainties, many Las Vegans are putting off the inevitable.

No, we're not talking about cheating death. We're referring to that other given. The one that takes a big chunk out of your paycheck every two weeks.

A study released this month by Intuit, parent company of TurboTax, placed Las Vegas among the top 10 cities for late tax filings in 2007. Intuit based its rankings on the number of tax returns filed electronically through its TurboTax Online program April 14-17, 2007, though it wouldn't disclose its city-specific data.

Why the tardiness?

It's not that people owe money. Roughly 80 percent of taxpayers have a refund headed their way, and fully two-thirds of clients who file late through accounting firm Taxplanners won't pay a dime on their taxes, said Ron Drake, president of the North Las Vegas company.

Blame instead the complexities of tax preparation.

For starters, tabulating taxes isn't exactly a barrel o' laughs for most people. That's especially true when you consider all those springtime diversions that compete for free time. Most folks would rather watch Major League Baseball's opening day, check out the three-week college basketball tournament, prep the yard for summer, hit the park with the kids or fit in some spring cleaning. Maybe even get a few cavities filled, or clear out that raging hornets' nest dangling over the patio. Anything but figure the taxes.

Taxpayers put off filing partly because the Internal Revenue Service "has this reputation that they're not easy to deal with," said Scott Gulbransen, a spokesman with TurboTax.

Huh. Wonder how the IRS got that rap.

"Taxes in general, whether you're getting a refund or you owe money, are just not fun," Gulbransen added. "It's human nature to avoid things that are difficult or that you don't want to do. And people are just busier today, whether they're single parents or married couples who both work and are raising families. It's just difficult to get around to doing taxes. We're seeing more people doing their taxes later and later."

The most common reason Drake sees behind late filings is a delay in reaching out to tax preparers. Too many consumers wait until early April to schedule an appointment with their accountant, only to find he's booked through Tax Day. So they'll go in postdeadline.

Late filings also happen when consumers underestimate how long it will take to organize paperwork and fill out forms. Turbo Tax officials note that most of the cities in the company's top 10 markets for late filings are places with deep Internet penetration and high levels of technological literacy. That means residents likely figure they can wait until the last minute to submit returns, because online programs such as, well, TurboTax, and even direct filing through the IRS' Web site enable them to file quickly and easily. The problems come at 10 p.m. on April 15, when procrastinators realize they can't find that mortgage-interest statement or a key 1099 form with details on independent-contractor earnings. The missing documents can translate into missed deadlines.

Plus, Las Vegas has its own set of factors that generate higher-than-average filing delays.

Both Gulbransen and Drake cited the city's service economy, with its cash-based, tip-heavy compensation, as a major drag on timely filing.

"When you're dealing with cocktail waitresses, parking valets or even small-business owners, they often get paid with cash," Gulbransen said. "They have a lot of income streams, and it can be difficult to sit down and think about putting it all in order."

Other tip earners end up with higher gratuity allocations than they'd expected on their wage-reporting forms, and they panic, Drake added.

"They get an add-on to their W-2 that kicks up their income another $2,000 or $3,000, and they just don't have it," he said. "They figure, 'That stinks. I'm gonna ignore it.' "

Southern Nevada also has a big contingent of small businesses, and many entrepreneurs deploy tax strategies that involve filing after April 15, said Wendell Waite, president of Waite & Associates CPAs in Las Vegas.

The IRS has made it easy to extend filing taxes to Oct. 15, Waite noted. A company owner who posts a 50 percent return on $200,000 in assets might owe $20,000 in levies; tack on penalties and interest of about 20 percent on that $20,000, and, because of that 50 percent return on investment, it can still be a smart strategy to wait until the later fall deadline to pay up.

"It's not that we're derelict people," Waite said. "It has everything to do with tax planning and strategy."

Rounding out the top causes for late filing are personal crises, such as a death in the family, serious illness, job loss or home foreclosure. A household in trauma, said Drake, is a household with higher odds of overlooking Tax Day.

Those last two concerns -- unemployment and foreclosure -- could cause an even higher rate of late filings in 2008 once the numbers are in. Nevada's unemployment rate has risen from 4.3 percent in February 2007 to 5.5 percent in February 2008, according to the state's Department of Employment, Training & Rehabilitation, and Nevada has spent most of the last year topping the nation with its share of mortgages in default.

Drake said the number of clients who missed the April 15 target was up 20 percent to 25 percent this season. He's not sure the sluggish economy is entirely behind the gain in delayed filings, but he did say homeowners in foreclosure have a higher probability of failing to file on time.

"(People in foreclosure) are in crisis," Drake said. "They're mad at the world. The last thing they want to do is feed it some hard-earned money, of which they don't have anymore."

Gulbransen said the souring economy could push more late filings in 2008.

"People have a lot to worry about," he said. "They're paying the mortgage, car payments, credit card bills. They're a little farther behind."

But Waite sees signs of fewer late filers this season at his business.

"This year, everybody wants their money," he said, "and he who files first gets his money first."

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.