“Quarterly” Payments

I have been paying quarterly estimated tax for years. Today as I made out a check for the 2nd quarter of 2010 (due June 15th), I wondered for the umpteenth why the IRS Department of the Treasury doesn’t divide the year into 3-month quarters and make the payment due on the 15th of the month after each quarter ends. While looking for the answer, I came across a blog post on the subject that was so thorough further research was unnecessary.

The due dates for quarterly taxes are April 15th, June 15th, September 15th, and January 15th, or the next business day if the 15th falls on a weekend or holiday. The due date for the second payment, just 2 months after the first, frequently trips me up and on several occasions I confess to forgetting about it completely. Payment 3 occurs 3 months after payment 2, but its deadline is still a month early by my calculation. Things get back on track with payment 4, which is due the month after the final quarter ends.

The asymmetric payment plan apparently bothered Mark Grannis enough to post a lengthy discussion about it on his Reasonable Minds blog in 2008. He seems most concerned with the issue of paying taxes early on money he hasn’t earned yet, going so far as to call the June and September payments a rip-off. While I agree that Mr. Grannis raises an important point, to me the important question is why. Why risk confusing taxpayers by adopting an irregular schedule?

I can’t work any harder to get an answer to the “why” question than Mr. Grannis did. He wrote his congressional representative and he corresponded with and talked directly to people at the Department of the Treasury, including a woman in the Technical Department. I’m now reporting double hearsay, but she apparently blamed it on Congress. One year long ago, back when they actually used to try to match receipts to expenditures, Congress needed additional funds before the middle of the year. So they moved the second quarterly payment up to June 15th, in effect getting a loan from the public. It’s been there ever since.

The story might be apocryphal although, as Mr. Grannis observed, it certainly sounds like something Congress would do. Perhaps taxpayers should have fought back then against the accounting gimmick. If so we might have a balanced budget this year instead of a trillion dollar deficit. Or maybe not.