It’s a fact of life – we move. People rarely die in the same house where they were born and raised. Even if they do, there are periods of time when they are living elsewhere – college, for example. And yet, one of the items frequently left off the ‘to do’ checklist when moving is “tell the IRS.” Why? Probably because most people don’t know how to tell the IRS they’ve moved. Most credit card and other bills have a ‘change of address’ spot on their payment slip (or a convenient button on their website). The Post Office has a card you can fill out – tell your postal person you’re moving, and more likely than not they’ll even bring it to you the next delivery day.

Not so with the IRS – there’s no “Check here if new address” box on the 1040, and no obvious button or link at www.irs.gov. Instead, you have to file Form 8822 – Change of Address, a separate form that you can’t file with your tax return. That’s right: even if you e-file, Form 8822 must be mailed in separately. Unfortunately, most people don’t even know about Form 8822 – it’s one of the least publicized forms out there, and at the same time, one of the most important. Most people who file every year assume either (a) that if you simply file the next year with your new address, the IRS will pick up on that and update their records, or (b) that filing a change-of-address card with the USPS (or some other government agency, like Social Security) will cause the IRS to update its records as well (because, of course, they’re both part of the government….).

{After the jump, find out why that may not be a good idea.}

Unfortunately, while (a) may eventually happen, there’s no guarantee it will (or when), or that the IRS will assume that the address on the tax return is the one they should be using from now on. In fact, if the IRS has a conflicting set of addresses, they’re likely to send out a notice to one or several (or all) to find out which one is correct. If they get no response, they will continue to use the address on the last filed tax return. As for (b), well…that won’t happen. And that’s for people while timely file their returns. If you haven’t filed in several years, the IRS may be sending letters to someplace you haven’t lived for 2, 3, or 10 years. And that may wind up costing you dearly.

Take Christopher Georgy, for example. Christopher hadn’t filed tax returns in a while – the case says he didn’t file from 2001 to 2007, at least. In addition, he moved often. In addition to being a non-filer, Christopher was an option (b) guy – he sent in change-of-address forms to the USPS and figured that would be good enough for the IRS (of course, he also called the IRS to give them his new address, but that doesn’t work, either). Eventually, the IRS got tired of waiting for him to file, and prepared their own returns for 2001, 2002 and 2003 resulting in a total of $100,000 in tax due for the three years. The IRS then began attempting to collect, sending notices to his 2000 address (the last year for which he did file a return, but from where he had long since moved). Eventually, the notices generated liens, and that got Georgy’s attention. He objected, saying the liens weren’t valid, because he never received them.

Unfortunately, Section 6212(b)(1) states that all the IRS has to do is mail notices to the last known address. And what is that? Well, basically whatever the IRS thinks it is (OK, technically it’s “where ‘the Commissioner reasonably believes the taxpayer wished to be reached at the time the notice of deficiency was sent.” Eschweiler v. United States, 46 F.2d 45, 48 (7thCir. 1991) (per curiam) (quoting Goulding, 929 F.2d at 331);see also McPartlin v. Comm’r, 653 F.2d 1185, 1189 (7th Cir. 1981), but in the real world, the IRS can make any reasonable argument it wants and the court will probably give it to them). It may be the address on your last filed tax return. Or it may be the address on forms sent to the IRS by third parties. If the IRS isn’t sure, they may send a letter (form 2797) to inquire as to whether or not you’ve moved, but they don’t have to. And if they send the letter to the wrong address, or you don’t respond, they’ll continue to use the address they have on file, which might be one you haven’t been at in over 10 years,

And that’s exactly what happened. The IRS sent a letter to a potential new address, and got no response. So the IRS continued to use the address from the 2000 tax return. And that, the court said, was good enough. Georgy should have filed  Form 8822 and changed his address – he might have resolved the situation a lot sooner. The price tag for not properly telling the IRS he’d moved? At least another $20,000 in penalties and interest as his 2002 and 2003 debts continued to accrue penalties and interest.

That’s an awfully expensive price tag for not completing a simple form that takes less than 5 minutes.