Tax Attic: Tax season reaches its halfway point

The tax season is well under way. It was off to a late start with the Internal Revenue Service not accepting electronically filed returns until January 29. In the old paper-filing days, we could have mailed in returns before that date but not any more. Today, Michigan, as with most states, require all tax professionals to file all returns via the computer. There are penalties for ignoring the rules, of course. Only if a return is rejected by the system, are we then allowed to send in a paper return. That return must be accompanied by a specific form detailing the reason why the return is being paper-filed. Long gone are the days when a taxpayer could just request that the return be mailed in. Today, during the tax season, Action Tax might mail in less than five returns to the IRS or to Michigan. It’s a different story, however, when we get to the realm of city returns. Statewide, most cities do accept e-filed returns, but not all. In our area, Big Rapids, Ionia, and Walker accept only paper returns. Grand Rapids was one of the first cities to accept e-filed returns and has done so for over ten years now. Walker had plans to begin accepting e-filed returns this year but hasn’t been able to pull it off as yet. We prepare a great many Walker returns and were looking forward to not having to process and mail them this year. Maybe next year or yet this year, Walker will get there.

This tax season reaches its halfway point on Friday, February 23. That’s also slightly later than usual. This is entirely due to the tax season ending this year on Tuesday, April 17. Last year, we didn’t finish off the season until April 18 so this is becoming somewhat of a habit. Most tax professionals will take great advantage of those extra days to finish up as many returns as possible. I’m sure we will be burning the midnight oil those couple of add-on days.

As tax professionals, we receive word from the IRS as soon as the Service discovers new scams and schemes to defraud taxpayers. Recently, we received word of an ingenious scheme. Thieves steal taxpayer information and file a fraudulent tax return with a nice refund, of course. In the past, this refund would be direct deposited into accounts known only to the thieves. As soon as the money was deposited by the IRS or Michigan into the account, it was withdrawn; the account was closed; and the thieves were gone. However, with this new scheme, they go as far as using a real working bank account of the taxpayer for direct deposit purposes. The thieves then use various gambits to get the money from the taxpayer. In one version, the thieves call the taxpayer and pretend to be from the IRS. If the refund is not sent back to the “fake” IRS, the taxpayer is threatened with criminal fraud and arrest. The thieves have the direct deposit information and use just enough information to make it sound very real. In another version, the thieves pretend to be from a collection agency acting as agents of the IRS. The refund was erroneously put into the taxpayer’s account. The collection agency, armed with an IRS case number, requests that the funds be sent to them and they will forward the amount on to the IRS, per the contract between the collection agency and the IRS. Ingenious and apparently successful. The IRS’ Criminal Investigation Division has received thousands of complaints in the past few weeks pertaining to this scam. So, what should you really do if you discover that a deposit has been made to your bank account or you receive a check in the mail from the United States Treasury Department and you have no idea what the check is for? You do have to send the money back but where do you send it and how do you send it? I will answer those questions next week. In the meantime, just hang up on those debt collection agency people or those calls from the IRS. 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.