Complaint resolution service publishes case studies, recall information and consumer news.

Great Tax Scam book for sale

A California man who the government accused of promoting an improper tax loan scheme has agreed to an injunction against completing future transactions. The man, Scott Catchart or California, did not admit wrongdoing, but agreed to stop the 90 Percent Stock Loan Program.

Government attornies allege that Cathcart misprepresented the progam to consumers by stating that they could avoid income tax on any gains because the transaction was a “loan”, not a sale.

“The public should beware of promoters who promise miraculous tax benefits,” said Nathan J. Hochman, Assistant Attorney General for the Justice Department’s Tax Division. “If it sounds too good to be true, it most likely is.”

Posted under Finance

Consumers who gave the federal government an interest-free loan for up to a year during 2007-2008 have undoubtedly filed for and may have even received their refund check by now.

Two words: Stop that!

There is absolutely no need for any consumer to receive a substantial income tax refund. Please consult with a tax professional if you are one of those people who consistently receive a refund. Many consumers we have talked with tell us that they view these refunds as “savings” and “found money” that they get every spring for big bills.

Nonsense.

That money is yours, and you received no interest or other compensation. Even if you receive a $1,200 refund, that means that you could have brought home an extra $100 each month during 2007. If you’re carrying credit card or other debt and also receiving a refund, you’ve lost twice — the government took more of your money without paying interest, and you paid interest on money you had borrowed.

Find an accountant or tax advisor.

For those of you who are waiting to file during the last 200 hours of the regular season, the Internal Revenue Service issued its “Dirty Dozen” list of scams targeting taxpayers. As befits any IRS document, there are too many words, so let’s boil it down fast so you can get back to finding those receipts:

1. Phishing - This is the scam where you get email that looks like it’s from one organization, but it really isn’t. The solution is simple, especially with financial and other personal email. Open your browser and type the organization’s address in, along with any extensions you found in the email.

2. Stimulus Payment Questions - You may have heard that you’re due a check in May or June if you paid federal income tax in 2007. This so-called “stimulus” payment is automatic. You don’t have to do anything, and you should run away from anyone who tells you they need information to process yours.

3. Frivolous Arguments - Very simply, you have to pay federal income taxes. If you don’t, your tax professional will explain why. Verify that person’s explanation with the IRS.

4. Fuel Tax Credit - Best left for professionals or the IRS Help Line. If you don’t understand the intricacies, don’t try at home with a calculator with keys sticky from Saturday morning pancake syrup.

5. Hiding Money Offshore - If you’re in that financial demographic and reading this blog, have we got a deal for you. Write us. We’ll help you invest wisely.

6. Avoiding Roth IRA Limits - Does the deal sound too good to be true? It probably is, especially if a financial consultant just told you that they can avoid the federal IRA limits.

7. Sending A “Corrected” W2 or 1099 - Yes, you’re going to get caught. No, the people who work at the IRS are not that dumb. If you have a W2 that claims $X and you try lowering your taxes by submitting a “corrected” form, you will indeed face a form of corrections.

8. Abatement Requests - If you don’t know, don’t ask. If you’re told you should, ask a second professional. (Are you sensing a theme?)

9. Tax Preparer Scams - There are good and bad people in every professional. A nice office or brand name from a national chain is meaningless. Check with your local or state government agencies before entrusting your financial future to a stranger.

10. Forming “Shell” Companies - Not the gas station, but a bogus corporate entity that lets you shift income around when it is really personally taxable. Yep, they know this one too.

11. Misuse of Trusts - There is a very legitimate financial need to use trusts in estate and financial planning. Be sure your financial planner and tax advisor are on the same page and understand. Don’t unintentionally make a mistake by trusting someone who didn’t know the full picture.

12. Charitable Donations - The IRS specifically singled out the notion of taxpayers disguising private school tuition payments as charitable donations. That’s pretty slick and pretty stupid. Here is the deal on charity: read the rules. If you’re not preparing your taxes, don’t overstate the condition, original cost or value of items you’ve donated. Get a detailed receipt. Take pictures. Do what you need to do to prove your donation.

We’re not tax or financial professionals. This is merely a synthesis of a news item the Internal Revenue Service shared with taxpayers. If you have questions or concerns, contact your local IRS office or talk with a tax professional.

Posted under Finance

The Internal Revenue Service urged taxpayers to check to see if they qualify for the telephone excise tax refund after more than 10 million early filers did not request the one-time refund.

The agency said that about 30 percent of all taxpayers did not request the telephone tax refund.

“Many taxpayers are overlooking this special refund and the chance to get a bigger refund,” said IRS Commissioner Mark W. Everson. “We encourage taxpayers to spend a few extra minutes reviewing their tax return to make sure they are making an accurate request. A little extra time can mean a bigger refund check.”

The government stopped collecting the long-distance excise tax last August after several federal court decisions held that the tax does not apply to long-distance service as it is billed today. Federal officials also authorized a one-time refund of the federal excise tax collected on service billed during the previous 41 months, stretching from the beginning of March 2003 to the end of July 2006. The tax continues to apply to local-only phone service.

To make the refund easier to figure, the government established a standard refund amount, based on personal exemptions, ranging from $30 to $60. If taxpayers have phone bills and other records, they can request the actual amount of excise tax paid. Though using the standard amount is optional, it is easy to figure and approximates the eligible amount for most individual taxpayers. Taxpayers only have to fill out one line on their return, and they don’t need to present proof to the IRS.

Out of the tax returns filed through Feb. 16, more than 10 million taxpayers did not request the telephone tax refund. And nearly half of those returns — more than 4.8 million — were completed by a tax preparer.

“We are surprised how many tax preparers are overlooking the telephone tax refund,” Everson said. “We want all taxpayers entitled to this refund to get it, whether they are using a tax preparer or doing the return themselves.”

For people requesting the telephone tax refund, it adds $30 to $60 — or even more — onto a refund. The IRS wants to make it as easy as possible for anyone who paid the tax to get this special refund. If you paid the tax and haven’t filed yet, here are some tips to help you figure the refund correctly and get it quickly:

* File electronically. Electronic-filing software flags often overlooked tax breaks and helps you figure them accurately and report them properly. If you use a professional tax preparer, ask that person to e-file your return.

* E-file for free. If your income is $52,000 or less, use the IRS’ Free File program to connect to a private-sector company offering free e-file services.

* Choose direct deposit. Whether you file electronically or on paper, you can get your refund at least a week sooner by having it deposited directly into your checking or savings account.

* Consider using the standard-refund amount for the telephone-tax refund. Though using the standard amount is optional, it is easy to figure and approximates the eligible amount for most individual taxpayers. You only have to fill out one line on your return, and you don’t need to present proof to the IRS. The standard amount, ranging from $30 to $60, is based on the number of exemptions you can claim on your return.

* If you paid more than the standard amount, you may figure your refund using the actual amount of tax shown on your phone bills and other records. Base your refund request on the three-percent federal tax paid, not the total phone bill. Do not count tax paid on local-only service. You must have the phone bills or other records adequate to support the amount you are requesting. These documents should not be sent along with the refund request but should be retained in case the IRS questions the amount requested.

* Do not file duplicate requests. If you file a regular income-tax return, do not file Form 1040EZ-T. Designed exclusively for requesting the telephone-tax refund, this simple form is for people who don’t need to file a regular income-tax return. If you want to take advantage of the earned income tax credit for low and moderate income workers, the child tax credit or other tax breaks, file a regular return and include your telephone-tax refund request on that return.

* Stay away from tax preparers who falsely claim that many, if not most, phone customers can get hundreds of dollars or more back under this program.

Posted under Finance

Led by representatives from Connecticut, North Carolina and crusading New York Attorney General Elliot Spitzer, a group of states continues chasing H&R Block over loans made to customers in anticipation of a refund. Spitzer was especially dogged, joining the others in a suit against Block at the height of tax season.

Spitzer’s suit claimed that tens of thousands of New Yorkers and hundreds of thousands of consumers nationwide had been steered wrong by the company. The entire tax preparation industry continues to come under fire, while ratcheting up the stakes for lower-income returns that boost profit margins.

The latest wrinkle is the so-called “paycheck stub” loan. In this transaction, a company provides a refund based on a customer’s last paycheck of the year, regardless of what tax liabilities or issues have occurred throughout the year. The rates, Spitzer and others claim, are too high and target an ill-informed consumer market.

Word now comes out of the Missouri company’s headquarters that the tax giant, which will book nearly $5 billion in revenue in 2006, will meet with a representative group of officials from different states. Consumer advocates are wary of the meeting, not only because Block is a mult-billion organizaation, but because a compromise agreement may end up being struck that could involve one of H&R Block’s other three divisions making use of data provided by the tax division to market the same loan.

“At the end of the day, all people want to see is a fast refund,” said Consumer Help Web President Joan Bounacos. “We encourage those people to seek tax counseling earlier in the year so that they are not getting the smallest possible refund. A tax refund sounds like a good idea, but is really an interest-free loan to the government, and because of inflation, ends up costing consumers more than they get back. The net effect is almost always a loss.”

Posted under Customer Service

The Internal Revenue Service has issued several recent consumer warnings on the fraudulent use of the IRS name or logo by scamsters trying to gain access to consumers’ financial information in order to steal their identity and assets.

Suspicious e-Mail/Phishing

Phishing is a scam where Internet fraudsters send e-mail messages to trick unsuspecting victims into revealing personal and financial information that can be used to steal the victims’ identity. Current scams include phony e-mails which claim to come from the IRS and which lure the victims into the scam by telling them that they are due a tax refund.

You Can Help Shut Down Phishing Schemes

The good news is that you can help shut down these schemes and prevent others from being victimized. If you receive a suspicious e-mail that claims to come from the IRS, you can relay that e-mail to a new IRS mailbox, phishing@irs.gov.

To Report Fraud

For other than phishing schemes, you may report the fraudulent misuse of the IRS name, logo, forms or other IRS property by calling the TIGTA toll-free hotline at 1-800-366-4484

Posted under Privacy

Cheers to Jeff Gelles of The Philadelphia Inquirer who reports that the agency is considering allowing tax preparers to sell data about their clients.

“In a world of identity theft and Sarbanes-Oxley, this makes no sense,” said Consumer Help Web President Joan Bounacos. “Why would anyone use a tax preparer who disclosed that they would sell the data? Only price or non-disclosure would typically change that and neither seems good for the consumer.”

Gelles’ article broke March 21 and has the IRS and the blogsphere in an uproar, to say nothing of consumer advocates. The IRS, which typically spits out 1-2 press releases a day, has been strangely quiet. The same cannot be said of consumer advocacy groups.

US-PIRG’s Pennsylvania chapter and the Consumer Federation of America both testified April 4 at the IRS’ final hearings on the subject. The IRS is reportedly considering changes based on an outpouring of public emotion, but perhaps most importantly, after lawmakers began questioning the agency’s motives.

Posted under Privacy

The Internal Revenue Service has reminded taxpayers about the agency’s “Dirty Dozen”––its latest annual tally of some of the most notorious tax scams––along with an alert to taxpayers this filing season to watch out for schemes that promise to reduce or eliminate taxes.

Two new schemes have worked their way onto the list in 2006. In recent months IRS personnel have noted the emergence of the two scams––“zero wages” and “Form 843 tax abatement”–– in which filers use IRS forms to claim that their tax bills have been wrongly inflated.

Also high on the list in 2006 is “phishing,” a favorite ploy of identity thieves. Over the past few years, the IRS has observed criminals working through the Internet, posing even as representatives of the IRS itself, with the goal of tricking unsuspecting taxpayers into revealing private information that can be used to steal from their financial accounts.

Several of the usual suspects from last year remain on the list. The IRS, for example, continues to see schemes designed to exploit charitable organizations. Some taxpayers, meanwhile, still use frivolous arguments to claim they do not owe taxes, despite the fact such reasoning has been thrown out of court time and again.

“When it comes to taxes, everyone has to pay their fair share,” IRS Commissioner Mark W. Everson said. “I urge taxpayers not to be taken in by hucksters who promise to lower or eliminate taxes. Getting caught up in the Dirty Dozen or similar schemes can lead to big headaches.

”Namely, involvement with tax schemes can lead to imprisonment and fines. The IRS pursues and shuts down promoters of these and numerous other scams. Anyone pulled into these schemes can also face repayment of taxes plus interest and penalties.

The IRS urges people to avoid these common schemes:

1. Zero Wages. In this scam, new to the Dirty Dozen, a taxpayer attaches to his or her return either a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 that shows zero or little wages or other income. The taxpayer may include a statement indicating the taxpayer is rebutting information submitted to the IRS by the payer.An explanation on the Form 4852 may cite “statutory language behind IRC 3401 and 3121″ or may include some reference to the paying company refusing to issue a corrected Form W-2 for fear of IRS retaliation. The Form 4852 or 1099 is usually attached to a “Zero Return.” (See number four below.)

2. Form 843 Tax Abatement. This scam, also new to the Dirty Dozen, rests on faulty interpretation of the Internal Revenue Code. It involves the filer requesting abatement of previously assessed tax using Form 843. Many using this scam have not previously filed tax returns and the tax they are trying to have abated has been assessed by the IRS through the Substitute for Return Program. The filer uses the Form 843 to list reasons for the request. Often, one of the reasons is: “Failed to properly compute and/or calculate IRC Sec 83––Property Transferred in Connection with Performance of Service.”

3. Phishing. Phishing is a technique used by identity thieves to acquire personal financial data in order to gain access to the financial accounts of unsuspecting consumers, run up charges on their credit cards or apply for new loans in their names. These Internet-based criminals pose as representatives of a financial institution and send out fictitious e-mail correspondence in an attempt to trick consumers into disclosing private information. Sometimes scammers pose as the IRS itself. In recent months, some taxpayers have received e-mails that appear to come from the IRS. A typical e-mail notifies a taxpayer of an outstanding refund and urges the taxpayer to click on a hyperlink and visit an official-looking Web site. The Web site then solicits a social security and credit card number. In a variation of this scheme, criminals have used e-mail to announce to unsuspecting taxpayers they are “under audit” and could make things right by divulging selected private financial information. Taxpayers should take note: The IRS does not use e-mail to initiate contact with taxpayers about issues related to their accounts. If a taxpayer has any doubt whether a contact from the IRS is authentic, the taxpayer should call 1-800-829-1040 to confirm it.

4. Zero Return. Promoters instruct taxpayers to enter all zeros on their federal income tax filings. In a twist on this scheme, filers enter zero income, report their withholding and then write “nunc pro tunc”–– Latin for “now for then”––on the return. They often also do this with amended returns in the hope the IRS will disregard the original return in which they reported wages and other income.

5. Trust Misuse. For years unscrupulous promoters have urged taxpayers to transfer assets into trusts. They promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. However, some trusts do not deliver the promised tax benefits, and the IRS is actively examining these arrangements. There are currently more than 200 active investigations underway and three dozen injunctions have been obtained against promoters since 2001. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering into a trust.

6. Frivolous Arguments. Promoters have been known to make the following outlandish claims: the Sixteenth Amendment concerning congressional power to lay and collect income taxes was never ratified; wages are not income; filing a return and paying taxes are merely voluntary; and being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy. Don’t believe these or other similar claims. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law.

7. Return Preparer Fraud. Dishonest return preparers can cause many headaches for taxpayers who fall victim to their schemes. Such preparers derive financial gain by skimming a portion of their clients’ refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Taxpayers should choose carefully when hiring a tax preparer. As the old saying goes, “If it sounds too good to be true, it probably is.” And remember, no matter who prepares the return, the taxpayer is ultimately responsible for its accuracy. Since 2002, the courts have issued injunctions ordering dozens of individuals to cease preparing returns, and the Department of Justice has filed complaints against dozens of others. During fiscal year 2005, more than 110 tax return preparers were convicted of tax crimes.

8. Credit Counseling Agencies. Taxpayers should be careful with credit counseling organizations that claim they can fix credit ratings, push debt payment plans or impose high set-up fees or monthly service charges that may add to existing debt. The IRS Tax Exempt and Government Entities Division is in the process of revoking the tax-exempt status of numerous credit counseling organizations that operated under the guise of educating financially distressed consumers with debt problems while charging debtors large fees and providing little or no counseling.

9. Abuse of Charitable Organizations and Deductions. The IRS has observed increased use of tax-exempt organizations to improperly shield income or assets from taxation. This can occur, for example, when a taxpayer moves assets or income to a tax-exempt supporting organization or donor-advised fund but maintains control over the assets or income, thereby obtaining a tax deduction without transferring a commensurate benefit to charity. A “contribution” of a historic facade easement to a tax-exempt conservation organization is another example. In many cases, local historic preservation laws already prohibit alteration of the home’s facade, making the contributed easement superfluous. Even if the facade could be altered, the deduction claimed for the easement contribution may far exceed the easement’s impact on the value of the property.

10. Offshore Transactions. Despite a crackdown by the IRS and state tax agencies, individuals continue to try to avoid U.S. taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance to do so. The IRS and the tax agencies of U.S. states and possessions continue to aggressively pursue taxpayers and promoters involved in such abusive transactions. During fiscal 2005, 68 individuals were convicted on charges of promotion and use of abusive tax schemes designed to evade taxes.

11. Employment Tax Evasion. The IRS has seen a number of illegal schemes that instruct employers not to withhold federal income tax or other employment taxes from wages paid to their employees. Such advice is based on an incorrect interpretation of Section 861 and other parts of the tax law and has been refuted in court. Lately, the IRS has seen an increase in activity in the area of “double-dip” parking and medical reimbursement issues. In recent years, the courts have issued injunctions against more than a dozen persons ordering them to stop promoting the scheme. During fiscal 2005, more than 50 individuals were sentenced to an average of 30 months in prison for employment tax evasion. Employer participants can also be held responsible for back payments of employment taxes, plus penalties and interest. It is worth noting that employees who have nothing withheld from their wages are still responsible for payment of their personal taxes.

12. “No Gain” Deduction. Filers attempt to eliminate their entire adjusted gross income (AGI) by deducting it on Schedule A. The filer lists his or her AGI under the Schedule A section labeled “Other Miscellaneous Deductions” and attaches a statement to the return that refers to court documents and includes the words “No Gain Realized.”

Posted under Finance, Privacy

Attorney General Bill Lockyer has filed a lawsuit against H&R Block alleging the tax preparation giant has violated 15 state and federal laws in marketing and providing high-cost refund anticipation loans (RALs) mainly to low-income families.

“Millions of Californians have placed their trust in H&R Block, and unfortunately H&R Block has repaid them by violating that trust,” said Lockyer. “In marketing and selling these expensive loans, H&R Block has profited greatly, but deceived consumers, violated their privacy rights and taken money from California families who can least afford it. This lawsuit seeks to hold the company accountable for unlawful business practices, prevent future violations and compensate victims.”

The complaint asks the court to require the defendants to pay restitution to harmed consumers, plus at least $20 million in civil penalties. The complaint does not specify the total restitution amount, but Lockyer estimated the maximum could reach into the hundreds of millions of dollars.

The defendants include H&R Block, Inc. and the following subsidiaries of the Kansas City, Missouri-based firm: H&R Block Services, Inc.; H&R Block Enterprises, Inc.; H&R Block Tax Services, Inc.; Block Financial Corporation; and HRB Royalty, Inc.

The complaint alleges the H&R Block defendants have violated 15 state and federal laws that regulate debt collection practices and contracts, and prohibit false or deceptive advertising, unfair business practices, and unauthorized use or sharing of individuals’ tax return information.

As described in the complaint, RALs are loans provided to taxpayers, secured by their expected refund. Internal Revenue Service rules prohibit H&R Block from providing the loans itself, so it contracts with banks for that purpose. H&R Block, however, provides clients the loan applications, fills out the applications, sends the applications to the banks, and distributes the loan checks to customers.

In a typical case, the program works like this: A customer comes into an H&R Block branch office. A “tax professional” calculates the customer’s taxes and determines they are owed a refund. The customer signs up for a RAL. If the bank approves the application, H&R Block ultimately provides the customer a check – not for the full tax refund amount, but for the estimated refund, minus loan fees, tax preparation fees and other charges. Depending on the amount of refund, those fees can force customers to pay the equivalent of annual interest exceeding 500 percent, according to the complaint.

Since 2001, the complaint alleges, Californians have bought more than 1.5 million RALs from H&R Block, “generating tens of millions of dollars in income for Block.” H&R Block has received a “substantial portion of the loan fees,” according to the complaint, and has purchased up to 49.9 percent of the loans. To illustrate how H&R Block’s RAL program targets low-income families, the complaint notes recipients of the federal Earned Income Tax Credit (EITC) comprise 70 percent of the company’s customers for RALs and similar products, even though EITC recipients account for just 17 percent of all taxpayers. The federal government established the EITC to benefit low-income workers and their families.

H&R Block holds itself out as a tax preparer and adviser that consumers can trust. But to maximize its RAL revenue, the complaint alleges, H&R Block has failed to adequately inform customers they can keep more of their income throughout the year and not have to wait for a refund at tax time.

Additionally, H&R Block’s marketing of RALs has been deceptive in a number of ways, according to the complaint. Advertisements have portrayed RALs as a “refund” or “instant money,” and falsely told consumers that RAL recipients get “cash, cold, green, in your hand, out the door.” In reality, the complaint alleges, the refund is a loan, the cash is a check, and the check is for substantially less than the refund, after the loan fees and other charges are deducted.

Further, according to the complaint, H&R Block frequently has steered customers to companies that charge fees to cash RAL checks, with H&R Block getting a kickback on a portion of those fees. H&R Block has failed to adequately disclose these arrangements to consumers, the complaint alleges.

H&R Block also participates with banks and other entities in a deceptive debt collection scheme under the banner of its RAL program, the complaint alleges. RAL customers are liable for paying fees and paying back the borrowed money if their anticipated refund does not materialize, for whatever reason. When a customer allegedly owes that debt, H&R Block still will sell them a new RAL when they come to H&R Block in a subsequent year to get their taxes prepared. H&R Block does not adequately tell such customers about any alleged debts, or that when they sign the new RAL application, they agree to automatic debt collection – including collection on alleged RAL-related debts from other tax preparers or banks. These applications are denied, and the customer’s anticipated refund is used to pay off the debt, plus a fee. “Therefore, Block clients who are claimed to owe debt from a prior year are led to expect a loan, but instead find themselves in a collection proceeding,” the complaint alleges.

Additionally, according to the complaint, H&R Block has used and shared customers’ tax-return information without clients’ written consent, in violation of state and federal law. H&R Block has illegally shared customers’ information, and unlawfully used clients’ tax return information for marketing RALs, home mortgages and other financial products, and to collect debts, the complaint alleges.

Posted under Finance

Unclaimed refunds totaling more than $2 billion are awaiting about 1.7 million people who failed to file a federal income tax return for 2002, the Internal Revenue Service announced last week. However, in order to collect the money, a return for 2002 must be filed with an IRS office no later than April 17, 2006.

The IRS estimates that half of those who could claim refunds would receive more than $570. In some cases, individuals had taxes withheld from their wages, or made payments against their taxes out of self-employed earnings, but had too little income to require filing a tax return. Some taxpayers may also be eligible for the refundable Earned Income Tax Credit.

“We want people to get the refunds they’re entitled to,” said IRS Commissioner Mark W. Everson. “We urge taxpayers to double-check their records before the April 17th deadline. Taxpayers can’t get a refund if they don’t file a tax return.”

In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim the refund within three years, the money becomes property of the U.S. Treasury. For 2002 returns, the window closes on April 17, 2006. The law requires that the return be properly addressed, postmarked and mailed by that date. There is no penalty assessed by the IRS for filing a late return qualifying for a refund.

The IRS reminds taxpayers seeking a 2002 refund that their checks will be held if they have not filed tax returns for 2003 or 2004. In addition, the refund will be applied to any amounts still owed to the IRS and may be used to satisfy unpaid child support or past due federal debts such as student loans.

By failing to file a return, individuals stand to lose more than refunds of taxes withheld or paid during 2002. Many low-income workers may not have claimed the Earned Income Tax Credit (EITC). Although eligible taxpayers may get a refund when their EITC is more than what they owe in tax, those who file returns more than three years late would be able only to apply it toward the taxes they owe (if any). They would not be able to receive a refund if the credit exceeded their tax.

Generally, individuals qualified for the EITC if in 2002 they earned less than $33,178 and had more than one qualifying child living with them, earned less than $29,201 with one qualifying child, or earned less than $11,060 and had no qualifying child.

Posted under Finance

The Internal Revenue Service (IRS) reports that more than 1.7 million taxpayers are due more than $2 billion in federal income tax refunds for 2001.

The IRS estimates that half of those who could claim refunds would receive more than $484. In some cases, individuals had taxes withheld from their wages or made payments against their taxes out of self-employed earnings but had too little income to require filing a tax return. Some taxpayers may also be eligible for the refundable Earned Income Tax Credit.

“The window is closing for 2001 refunds,” IRS Commissioner Mark W. Everson said. “As soon as you send us your tax return, you’ll get your money. But if you don’t file, you won’t get anything.”

When no tax return is filed, Everson’s office states that federal law allows the money to revert to the federal government after a three year period. The agency posted a list of tax refunds due by state and has embarked upon a massive public relations campaign to reunite taxpayers with their refunds.

For additional help, consumers can also call the IRS toll-free help line at 1-800-829-1040.

Posted under Finance