In her annual report to Congress, the nation's taxpayer advocate lays out the problems you may face when filing this year.
Delayed tax returns and late tax code changes are among the most serious problems facing taxpayers today, according to taxpayer advocate Nina Olson in an annual report to Congress Wednesday.
The National Taxpayer Advocate is appointed by the Treasury Secretary and is charged with representing taxpayer interests before the IRS and Congress.
Among 29 of the most serious taxpayer problems outlined in the report, here are five that Olson detailed:
Missed deductions
Late-year tax law changes, and delays in processing those changes, mean some payers could miss out on tax deductions.
The IRS finalizes its Form 1040 and form 1040A in November. If law changes are made later in the year, taxpayers might not receive updated forms and could file inaccurate returns, Olson said. Taxpayers using tax preparation software face the same problem.
While middle-class taxpayers welcome last month's approved alternative minimum tax patch, which shields them from an old tax law for the wealthy not adjusted for inflation, the late tax law change could affect taxpayers claiming the Child and Dependent Care Credit or other credits, Olson said. This also means tax refund delays for millions.
Refund delays
About 80 percent of taxpayers receive a refund when they file their returns, Olson said, citing the IRS, and for low-income families, refunds are particularly important.
Taxpayers who take the Earned Income Tax Credit, for example, could be significantly impacted by refund delays.
"For some taxpayers, a delay of two to four weeks in receiving the refund could mean eviction, inability to pay the high heating bills that arise during winter, or defaulting on credit card bills from the holiday season," Olson wrote in her report to Congress.
Among families receiving EITC benefits for the 2005 tax year, the average refund amount was $3,093.46, or about 20 percent of the average adjusted gross income, $15,484.52, of those taking the credit, Olson noted.
Refund anticipation loans
Refund anticipation loans sold by tax preparers are "disproportionately targeted toward low-income taxpayers and may exploit those taxpayers' trust in their preparers as well as their lack of financial sophistication," according to Olson.
In addition, some tax preparers have a financial incentive to inappropriately inflate refund amounts, and taxpayers might not completely understand that the refund anticipation loan is separate from filing a tax return, she wrote.
The IRS says it is proposing steps to restrict these practices among tax preparers.
Identity theft
Too often, victims of identity theft receive more scrutiny from the IRS than the perpetrators of identity theft, Olson wrote, noting that identity theft could lead to the delay or denial of refunds, the assessment of tax debts reflecting a fraudulent filer's return, and victims being required to prove their identity to the IRS every year.
If a thief uses another's social security number to report false wages, the IRS system doesn't interpret the duplicate filing as identity theft situation, she said. Instead, the innocent taxpayer's refund is reduced, frozen or the system creates a balance due, according to the advocate's report.
If there is a balance due as a result of two returns filed under the same social security number, the IRS will begin collection actions against the innocent taxpayer, her report notes.
While it has made some improvements, "The IRS has not done enough to improve identity theft procedures for victims of identity theft or to secure its filing system from fraudulent filers," Olson said.
Taxpayer assistance troubles
Shortcomings at IRS-sponsored taxpayer assistance centers are making it difficult for taxpayers requiring face-to-face assistance to get help with their tax returns, the report said.
Taxpayers seeking assistance face inconvenient locations, lack of services, payment problems, and questions deemed by the center to be "out-of-scope," or too complex for IRS employees or volunteers to answer, according to Olson.
While the IRS now acknowledges that there will always taxpayers that require face-to-face assistance in order to comply with tax laws, "the next step is to ensure that Taxpayer Assistance Centers are adequately staffed to meet the needs of that population and adequately trained to answer the questions most likely to be asked by that population," Olson wrote.
Additionally, Olson said a taxpayer bill of rights, outlining what taxpayers have a right to expect from their government's tax system and what the government has a right to expect from its taxpayers, will benefit both taxpayers and tax administration.
The full annual report to Congress from the National Taxpayer Advocate can be found here on the IRS Web site
Showing posts with label consumer rebate. Show all posts
Showing posts with label consumer rebate. Show all posts
Tuesday, February 5, 2008
Thursday, January 31, 2008
IRS warns of rebate scams
Identity thieves use economic stimulus plan to steal personal information over the phone, Internet.
Even before Congress passes an economic stimulus package, identity thieves are using promises of tax rebates to trick people into revealing financial and personal data, the Internal Revenue Service warned Wednesday.
Under one scheme, the IRS said, people are receiving phone calls telling them they can only receive a rebate if they provide bank account information for a direct deposit.
The tax agency stressed that it does not collect information by telephone and that no legislation has been enacted that would allow it to provide advance payments to taxpayers or that specifies the details of those payments.
The House last week, as part of an economic stimulus package, approved tax rebates of $600 and $1,200 respectively for most individuals and couples, with another $300 per child. The Senate is now considering a slightly different version.
The IRS also repeated past warnings of e-mails, supposedly coming from the agency, where people are asked to enter personal information on a form needed to obtain a tax refund.
Don't spend your rebate just yet
A new scam, it said, involves an e-mail notification that a person's tax return will be audited with instructions to click on links to complete forms with personal and account information.
Businesses and accountants are also getting e-mails with instructions to download information on tax law changes. Clicking on these links could download "malware" onto the recipient's computer that gives the scammer remote access to the computer hard drive.
In another telephone scam, a caller claims to be an IRS employee who says the taxpayer has not cashed a refund check and asks the person to verify his or her bank account number.
On Tuesday, at a Senate Finance Committee confirmation hearing for Douglas Shulman, the nominee to be IRS commissioner, Sen. Charles Schumer, D-N.Y., expressed concern that taxpayers would be victimized by tax prepares and lenders who charge high interest rates for short-term advances on their stimulus rebates.
The IRS advised people not to click on any link from an e-mail purporting to come from the tax agency. People receiving questionable e-mails can contact the IRS through phishing@irs.gov.
Senate Democrats: Add checks for seniors
Stimulus deal: What's in it for small biz
Even before Congress passes an economic stimulus package, identity thieves are using promises of tax rebates to trick people into revealing financial and personal data, the Internal Revenue Service warned Wednesday.
Under one scheme, the IRS said, people are receiving phone calls telling them they can only receive a rebate if they provide bank account information for a direct deposit.
The tax agency stressed that it does not collect information by telephone and that no legislation has been enacted that would allow it to provide advance payments to taxpayers or that specifies the details of those payments.
The House last week, as part of an economic stimulus package, approved tax rebates of $600 and $1,200 respectively for most individuals and couples, with another $300 per child. The Senate is now considering a slightly different version.
The IRS also repeated past warnings of e-mails, supposedly coming from the agency, where people are asked to enter personal information on a form needed to obtain a tax refund.
Don't spend your rebate just yet
A new scam, it said, involves an e-mail notification that a person's tax return will be audited with instructions to click on links to complete forms with personal and account information.
Businesses and accountants are also getting e-mails with instructions to download information on tax law changes. Clicking on these links could download "malware" onto the recipient's computer that gives the scammer remote access to the computer hard drive.
In another telephone scam, a caller claims to be an IRS employee who says the taxpayer has not cashed a refund check and asks the person to verify his or her bank account number.
On Tuesday, at a Senate Finance Committee confirmation hearing for Douglas Shulman, the nominee to be IRS commissioner, Sen. Charles Schumer, D-N.Y., expressed concern that taxpayers would be victimized by tax prepares and lenders who charge high interest rates for short-term advances on their stimulus rebates.
The IRS advised people not to click on any link from an e-mail purporting to come from the tax agency. People receiving questionable e-mails can contact the IRS through phishing@irs.gov.
Senate Democrats: Add checks for seniors
Stimulus deal: What's in it for small biz
Sunday, January 27, 2008
Tax rebates: Where's your check?
Lawmakers are still working out final details on cutting checks to all Americans to fight recession.
Consumers fuel the economy and if they're strapped, the thinking goes, better get them some cash to spend.
The biggest component of any government plan to jump-start the economy is expected to be issuing tax rebate checks - both Republicans and Democrats are pushing the idea of sending out checks for several hundred dollars if not more.
But their effectiveness is debated, and it could be summer before Americans see any real cash.
In a statement on the economy delivered Friday morning, President Bush said any plan should feature "direct and rapid income tax relief" to boost consumer spending.
"Letting Americans keep more of their own money should increase consumer spending, and lift our economy at a time when people otherwise might spend less," he said.
As of Saturday morning, there was little expectation that a deal would be finalized before Tuesday when Congressional leaders are expected to meet with President Bush. In his Saturday radio address, Bush said he favored tax cuts but opposed any spending programs that could appear in a Democratic stimulus plan,
Whatever the final decision, here's how a rebate would work, when you're likely to get a check and how it might affect the economy.
When
Once a rebate is decided on, the IRS could start mailing out checks by the end of June since the agency is now in the middle of the 2007 tax-filing season, said Jason Furman, a senior fellow at the Brookings Institution. The IRS, however, is not yet commenting on the matter since negotiations about the rebate are still under way.
The goal, however, for both Democrats and Republicans is to get the money into the hands of consumers as soon as possible.
In a briefing after the president's statement, Treasury Secretary Henry Paulson said, "If (tax relief) is broad-based and simple, I believe we'll be able to get it out quickly and in time to make a difference this year."
On Friday afternoon, House Financial Services Chairman Barney Frank, D-Mass., told CNN he believed lawmakers could pass a stimulus package, including a rebate, by March 1.
How much
Right now, President Bush is said to want an income tax rebate that would be generated by eliminating the 10 percent tax bracket, which applies to roughly the first $8,000 of income for single filers and the first $16,000 of income for married couples filing jointly.
That would mean taxpayers could get rebates of up to $800 if single, or $1,600 if married.
But neither President Bush in his statement nor Paulson in a briefing afterwards would confirm that amount. "I don't want to play bigger than a bread box," Paulson told reporters. "The president is focused on broad-based tax relief for those paying taxes."
Who would get it
Democrats could get on board with an income tax rebate if it's fully refundable, meaning that everyone with earned income would get the full rebate, even if they didn't make enough money to owe income tax, said Furman.
Otherwise, roughly 40 percent of tax filers (which is more than 50 million households) would get only a partial rebate or no rebate at all, according to the liberal Center on Budget and Policy Priorities.
A significant portion of that 40 percent would be families of four making between $25,000 and $40,000, the CBPP said.
There are a few ways that could be prevented, Furman said.
One way is to offer tax credits, a dollar-for-dollar reduction of your tax bill. If it's refundable, it means you get the credit even if your tax bill is $0 or something less than the full credit.
Another way is to have the rebate be a payroll tax rebate. The payroll tax - 6.2 percent of your wages - is what's taken out of everyone's paycheck to fund Social Security, no matter how low your annual income.
A payroll tax rebate would not affect your Social Security benefits or the long-term solvency of the entitlement program, Furman said, because it would really serve as a tax credit. In other words, money from your paycheck would still be taken out and put towards Social Security, but the federal government would send you a check that would serve as an advance on a refundable tax credit on your tax return.
Do rebates work?
Economists disagree about the effectiveness of rebates. "Estimates of how much consumers spend in response to various stimuli are treacherous," former Federal Reserve Governor Lyle Gramley wrote in an e-mail to CNNMoney.com.
Gramley noted, for instance, that estimates of spending by consumers who cash out home equity range wildly - from 0 to 60 cents on the dollar.
But Furman and Mark Zandi, chief economist of Moody's Economy.com, point to a study published last year that found in 2001, when households received rebates between $300 and $600, consumers spent two-thirds of those rebates within six months of receiving them. The study estimates the rebates gave a healthy boost to consumer spending at the time.
But, Zandi noted in an e-mail, "The effectiveness of a tax rebate on consumer spending would be enhanced if targeted to lower and middle income households that are more financially constrained and thus more likely to quickly spend the rebate check."
A study of various stimulus options by the Congressional Budget Office released this week, meanwhile, found that a one-time rebate could be highly cost-effective in terms of boosting demand if it's focused on people most likely to spend it. It also found that a rebate could take between 6 months and a year to achieve its full effect in boosting demand.
If rebate checks are first sent out starting in late June - almost six months from now - it's not unreasonable to wonder if that is soon enough to be effective. Zandi thinks it could be.
"It certainly won't forestall a recession if we are in one, but it could reduce the severity of a downturn or make it shorter," he said in separate e-mail. "Say the rebate is $100 billion. Two-thirds will get spent by year end if the 2001 tax rebate is a guide. Thus, $60-$70 spent in the second half of the year will translate into about 1% of annualized real GDP growth. That is measurable."
Consumers fuel the economy and if they're strapped, the thinking goes, better get them some cash to spend.
The biggest component of any government plan to jump-start the economy is expected to be issuing tax rebate checks - both Republicans and Democrats are pushing the idea of sending out checks for several hundred dollars if not more.
But their effectiveness is debated, and it could be summer before Americans see any real cash.
In a statement on the economy delivered Friday morning, President Bush said any plan should feature "direct and rapid income tax relief" to boost consumer spending.
"Letting Americans keep more of their own money should increase consumer spending, and lift our economy at a time when people otherwise might spend less," he said.
As of Saturday morning, there was little expectation that a deal would be finalized before Tuesday when Congressional leaders are expected to meet with President Bush. In his Saturday radio address, Bush said he favored tax cuts but opposed any spending programs that could appear in a Democratic stimulus plan,
Whatever the final decision, here's how a rebate would work, when you're likely to get a check and how it might affect the economy.
When
Once a rebate is decided on, the IRS could start mailing out checks by the end of June since the agency is now in the middle of the 2007 tax-filing season, said Jason Furman, a senior fellow at the Brookings Institution. The IRS, however, is not yet commenting on the matter since negotiations about the rebate are still under way.
The goal, however, for both Democrats and Republicans is to get the money into the hands of consumers as soon as possible.
In a briefing after the president's statement, Treasury Secretary Henry Paulson said, "If (tax relief) is broad-based and simple, I believe we'll be able to get it out quickly and in time to make a difference this year."
On Friday afternoon, House Financial Services Chairman Barney Frank, D-Mass., told CNN he believed lawmakers could pass a stimulus package, including a rebate, by March 1.
How much
Right now, President Bush is said to want an income tax rebate that would be generated by eliminating the 10 percent tax bracket, which applies to roughly the first $8,000 of income for single filers and the first $16,000 of income for married couples filing jointly.
That would mean taxpayers could get rebates of up to $800 if single, or $1,600 if married.
But neither President Bush in his statement nor Paulson in a briefing afterwards would confirm that amount. "I don't want to play bigger than a bread box," Paulson told reporters. "The president is focused on broad-based tax relief for those paying taxes."
Who would get it
Democrats could get on board with an income tax rebate if it's fully refundable, meaning that everyone with earned income would get the full rebate, even if they didn't make enough money to owe income tax, said Furman.
Otherwise, roughly 40 percent of tax filers (which is more than 50 million households) would get only a partial rebate or no rebate at all, according to the liberal Center on Budget and Policy Priorities.
A significant portion of that 40 percent would be families of four making between $25,000 and $40,000, the CBPP said.
There are a few ways that could be prevented, Furman said.
One way is to offer tax credits, a dollar-for-dollar reduction of your tax bill. If it's refundable, it means you get the credit even if your tax bill is $0 or something less than the full credit.
Another way is to have the rebate be a payroll tax rebate. The payroll tax - 6.2 percent of your wages - is what's taken out of everyone's paycheck to fund Social Security, no matter how low your annual income.
A payroll tax rebate would not affect your Social Security benefits or the long-term solvency of the entitlement program, Furman said, because it would really serve as a tax credit. In other words, money from your paycheck would still be taken out and put towards Social Security, but the federal government would send you a check that would serve as an advance on a refundable tax credit on your tax return.
Do rebates work?
Economists disagree about the effectiveness of rebates. "Estimates of how much consumers spend in response to various stimuli are treacherous," former Federal Reserve Governor Lyle Gramley wrote in an e-mail to CNNMoney.com.
Gramley noted, for instance, that estimates of spending by consumers who cash out home equity range wildly - from 0 to 60 cents on the dollar.
But Furman and Mark Zandi, chief economist of Moody's Economy.com, point to a study published last year that found in 2001, when households received rebates between $300 and $600, consumers spent two-thirds of those rebates within six months of receiving them. The study estimates the rebates gave a healthy boost to consumer spending at the time.
But, Zandi noted in an e-mail, "The effectiveness of a tax rebate on consumer spending would be enhanced if targeted to lower and middle income households that are more financially constrained and thus more likely to quickly spend the rebate check."
A study of various stimulus options by the Congressional Budget Office released this week, meanwhile, found that a one-time rebate could be highly cost-effective in terms of boosting demand if it's focused on people most likely to spend it. It also found that a rebate could take between 6 months and a year to achieve its full effect in boosting demand.
If rebate checks are first sent out starting in late June - almost six months from now - it's not unreasonable to wonder if that is soon enough to be effective. Zandi thinks it could be.
"It certainly won't forestall a recession if we are in one, but it could reduce the severity of a downturn or make it shorter," he said in separate e-mail. "Say the rebate is $100 billion. Two-thirds will get spent by year end if the 2001 tax rebate is a guide. Thus, $60-$70 spent in the second half of the year will translate into about 1% of annualized real GDP growth. That is measurable."
Friday, January 25, 2008
Deal struck to send checks to taxpayers
Compromise would provide $600 rebates to most taxpayers in effort to spur spending and head off recession. High-income earners are mostly left out.
Congressional leaders and Bush administration officials agreed Thursday on a $150 billion stimulus measure aimed at keeping the economy from falling into recession.
Most single taxpayers would get $600 and most two-wage households would get at least $1,200. The deal includes an additional amount of $300 per child. A total of 116 million taxpayers will receive checks of some size.
The main exception: higher-income taxpayers or individuals earning $75,000 or more or couples earning $150,000 or more. They would get reduced rebate checks, or none at all, depending on their income.
The deal was announced Thursday afternoon by Speaker of the House Nancy Pelosi, D-Calif., House Minority Leader John Boehner, R-Ohio, and Treasury Secretary Henry Paulson.
more...http://money.cnn.com/2008/01/24/news/economy/stimulus_package/index.htm?postversion=2008012421
Congressional leaders and Bush administration officials agreed Thursday on a $150 billion stimulus measure aimed at keeping the economy from falling into recession.
Most single taxpayers would get $600 and most two-wage households would get at least $1,200. The deal includes an additional amount of $300 per child. A total of 116 million taxpayers will receive checks of some size.
The main exception: higher-income taxpayers or individuals earning $75,000 or more or couples earning $150,000 or more. They would get reduced rebate checks, or none at all, depending on their income.
The deal was announced Thursday afternoon by Speaker of the House Nancy Pelosi, D-Calif., House Minority Leader John Boehner, R-Ohio, and Treasury Secretary Henry Paulson.
more...http://money.cnn.com/2008/01/24/news/economy/stimulus_package/index.htm?postversion=2008012421
Thursday, January 24, 2008
Stimulus debate turns on rebates
President Bush and congressional leaders say they are ready to push ahead on plans to boost the economy, but big sticking points remain.
As pressure builds on Washington to juice the economy, a one-time consumer rebate has emerged as the likely centerpiece of a $150 billion stimulus program.
President Bush met with congressional leaders Tuesday afternoon to discuss options, which include extended unemployment benefits and business tax breaks.
"I believe we can find common ground to get something done ... to make sure that this uncertainty doesn't translate into more economic woes for our workers and small business people," Bush said. more...http://money.cnn.com/2008/01/22/news/economy/rebate_negotiations/index.htm?postversion=2008012217
As pressure builds on Washington to juice the economy, a one-time consumer rebate has emerged as the likely centerpiece of a $150 billion stimulus program.
President Bush met with congressional leaders Tuesday afternoon to discuss options, which include extended unemployment benefits and business tax breaks.
"I believe we can find common ground to get something done ... to make sure that this uncertainty doesn't translate into more economic woes for our workers and small business people," Bush said. more...http://money.cnn.com/2008/01/22/news/economy/rebate_negotiations/index.htm?postversion=2008012217
Subscribe to:
Posts (Atom)