WATCH YOUR MAIL, WATCH YOUR BACK
It is an unfortunate fact that many people and businesses treat administrative tasks like opening up mail as a nuisance. When people get busy with substantive work and the distracting events of life these seeming nuisance tasks get neglected, leading to potentially disastrous results.
What Happens If You Don’t Open Your Mail in a Timely Way?
I had a client who became very busy with his plumbing business and neglected important administrative tasks like opening up his mail. He couldn’t afford to hire an office assistant and his wife worked full-time as a teacher. He had loans with several banks to finance his business operations.
One bank mailed him notices over the course of six months asking for copies of his tax returns. The bank needed this information to determine his creditworthiness. He never opened up and read the notices and never responded to the bank.
The bank reacted by significantly raising the interest rate they charged him. He never noticed this either. Finally, after almost a year of paying much higher interest I asked him why he was being charged a double-digit rate on his loan. This information came to my attention in the course of preparing the business tax returns.
My client was shocked and enraged. He called his bank and asked them what was going on and they explained how they had sent him many requests for tax return information and never received a response.
This business owner ended up paying thousands of dollars in additional interest merely because he did not give his bank important paperwork. Five minutes of time and a postage stamp would have saved him thousands.
An Un-Opened Letter May Be a Ticking Time Bomb
Letters may contain all kinds of requests or demands for information. Neglecting your mail will expose you and your business to unnecessary costs and risks. Letters from the IRS tend to be noticed and most people will open and respond or ask their accountant for help. But the IRS is not the only source of risk.
Mail is in some ways a threat delivery system. It is merely another way for Life to transmit harm, risk and adversity. The same is true for email and voicemail. Trouble transmits itself in many forms and frequencies.
During the Cold War the U.S. and the Soviet Union spent billions developing a vast network of early detection radar stations and space satellites. This system was called the Distant Early Warning (“DEW”) line and its purpose was to watch for a sudden nuclear attack by the enemy.
People and business owners must have their own DEW line and continuously watch for all kinds of threats including hacking, identity theft, important information requests from banks, legal notices pertaining to warranties and class action lawsuits, etc. Don’t wait for trouble to knock on your door, and don’t miss out on opportunity either.
Real-Life Examples of Dangerous Mail
I cringe inside whenever I visit the office of a client and see a huge pile of un-opened mail sitting on top of the business owner’s desk. Here are some real-world examples of dangerous mail that I have encountered in my work as an accountant:
(1) You’ve been sued but don’t know it. Your minimum wage office clerk signed for a certified mail letter addressed to you. The letter warns of impending legal action and specifies a court date when you must appear. This letter is filed away or buried deep inside a huge pile of un-opened mail sitting on top of your desk, gathering dust.
Because you don’t know you’ve been sued you never show up in court and, therefore, you lose the case by default. You find all this out when the county Sheriff serves you another legal notice requiring payment in full for the court case you lost because you never appeared.
(2) You are sent a 30-day letter by your town for unpaid and delinquent property taxes. You are out of the country on a three-month vacation and asked your sister to take care of bills and mail while you are gone. Your sister gets distracted by other personal events and work and as a result the letter from the town is never opened and the property tax bill is not paid. The town files a lien on your home.
(3) The IRS sends you a letter asking for some additional information about your company tax return. The letter is routine and could have been resolved quickly and easily. Unfortunately, the letter is never opened and the IRS escalates the issue to a full-blown audit.
(4) You own a 2003 Kia Sorento with a 3.5 liter engine, but have a bad habit of throwing out or ignoring most of your mail. As a result you never find out that you qualify for a class action settlement because this vehicle has a defective crankshaft bolt. You miss out receiving a substantial monetary settlement. You may also miss out on other class action settlements for Johnson’s Bedtime Bath products, the Electrolux Dryer, the Sony cyberattack, and the Remington Rifle defective trigger.
(5) A business customer pays you with a bad check. The check bounces, is deducted from your bank account along with a $25 bad check fee, and then almost a year goes by before your accountant brings this fact to your attention in the course of doing bookkeeping. The person who wrote the bad check moved out-of-state and it is now very difficult to collect.
Life itself is a type of business. Your life is the most important business you will ever own.
George Adams
Certified Public Accountant Master of Business Administration
Tel: (207) 989-2700 E-Mail: GeorgeAdams@IntelligenceForRent.com
450 South Main Street: The HQ of IQ
Brewer, Maine 04412-2339
©2015 Copyright George Adams CPA MBA. All Rights Reserved.
