Among 8 Million New to Tax Rolls, Youths Are Targeted : IRS Puts Heat on Lagging First-Time Filers to Pay Up

Uncounted numbers of teen-agers and children who this year filed their first tax returns are about to get a message from the IRS: Pay your overdue taxes or your bank account may be seized.

The Internal Revenue Service, weary at being equated with the Grinch that stole Christmas, is going out of its way to avoid carrying out that threat.

Almost six months after the April 15 deadline for filing 1987 returns, the IRS is completing a series of mailings to more than 15 million taxpayers of all ages who filed but failed to pay all or part of their taxes.

Because as many as 8 million young people were brought onto the tax rolls in 1987, the IRS believes that the number of taxpayers who didn’t pay up includes many first-time filers. And the agency is trying to impress on them the importance of paying up.

“We assume these younger taxpayers are not too sophisticated about the tax laws and we are trying to make them aware of their obligations,” IRS spokesman Frank Keith said Monday.

The young people at risk could be a 1- or 2-year-old with interest or dividends on investments given to them or a 19-year-old college student with a part-time job. Each could have become liable for taxes in 1987 because of the big tax overhaul enacted a year earlier.

“With several million new filers as a result of this new law, there’s no question but that there are some folks who filed returns without paying,” said Charles Hoyle, deputy assistant IRS commissioner for collections. “The notices (of taxes due) are out there, and we’re hoping they will contact us and try to resolve this without having to resort to any type of collection action.”

Any taxpayer who files a return on time but fails to pay the taxes due is likely to receive one or more computer-generated notices from the IRS. There are usually four letters, three or four weeks apart, each sounding a little tougher than the last. The fourth letter cautions that the IRS will take legal action to collect the tax unless it is paid within 10 days.

That action, Hoyle notes, can include seizing the bank account of a child with interest income or the wages of one who is on a payroll.

Past-due bills are subject to 10% interest plus a penalty that climbs to 1% a month after the fourth notice is sent.

Under the 1986 law, any child must file a return if he or she has any combination of earnings and unearned income--including interest and dividends--of more than $500. The unexpected tax bite on many young people comes from another change: Any child who can be claimed as a dependent by a parent is denied a personal exemption on his or her own return.