Tax Attic: Returns & refunds

The front-page news for our area over the past few months, including Sunday’s Grand Rapids Press, has been the water situation in our Rockford area. Deservedly so, I would add. There are not too many items I can think of that are more important than the water we all drink; use in our food recipes; make coffee with; brew our beer with; shower; wash our clothes in; use to irrigate our lawn; wash our cars; put in our pets’ bowls; etc; etc; etc. I certainly have the highest level of empathy for those adversely affected by the PFAS-tainted water. One of the few effective solutions is to filter the water with a granulated carbon filtration system that removes the PFAS. It’s an expensive process but how do you put a price on clean water? I’m wondering how long it will be before all water in Michigan, or the entire United States, for that matter, will be filtered through some type of process just to ensure it’s not harmful? What chemical is out there that no one is filtering for right now? I hope there isn’t any and everyone is filtering for everything. Of course, you all do remember, like all Detroit Lions fans, I’m an optimistic person. I’m confident the Lions will make it to and win a Super Bowl and this water fiasco will be solved as well. Eventually. It just might not happen in any of our current lifetimes.

Something that will happen in our lifetimes is this tax season. It’s going on and will end this year on April 17. The Internal Revenue Service started to accept electronically-filed returns on Monday, January 29. Refunds from those returns will be issued by Feb. 15 unless the return contains a Child Tax Credit, an Earned Income Tax Credit, or an American Opportunity Educational Tax Credit. Refunds with one or more of those refundable credits may not have the refund issued until February 27. The IRS is going to use those extra days to do its’ best to make sure the return is a real return and not a fake return. Identity Theft is rampant within our tax filing system. How is the IRS fighting Identity Theft this year? First, by just delaying the refund by two weeks, it gives them a chance to compare this year’s return with last year’s return for discrepancies. If last year’s return didn’t have any children on it and had a balance due but this year’s has five children, of which two were adopted and two are in college, and has a refund of $20,000, the IRS has a chance to compare and determine it has to make an inquiry before issuing that $20,000 refund. I’m all for that and will do everything we can do to help them determine when a return is real. For example, tax preparers, this year, are being asked to include driver’s license information for all taxpayers. Some states, such as New York, are not accepting electronically-filed returns without driver’s license numbers on the return. I’m convinced other states will follow suit as well as the IRS. It’s good information that perhaps identity thieves don’t have. Another option available to the IRS is to issue a six digit Identity Theft Pin (ITP) Number to the taxpayer. This ITP number is mailed to the taxpayer and is known only to the IRS’ computer and the taxpayer. If the taxpayer doesn’t put the pin on the return, the return won’t be accepted as filed. It has to have that pin or the IRS presumes it’s a fake return. In the whole scheme of things, the ITP number in conjunction with the driver’s license, may be the best deterrent available. Since it’s our money, I wish the IRS success in fighting the eternal threat of Identity Theft. This is Jerry Coon signing off.

Jerry Coon is an Enrolled Agent.

He owns Action Tax Service on Northland Dr in Rockford.

Contact Jerry at www.actiontaxservice.com