Q: What advice do you have for last-minute tax filers?
A: Don’t panic. You obviously are not alone, according to IRS estimates. As of March 24, only 54 percent of the 135 million returns it expects for the 2005 tax year had been filed with the federal tax collection agency. But now it is crunch time for taxpayers who still need to complete and send their tax returns to the IRS. Many of those who have procrastinated may turn to a professional for help, especially if one’s financial portfolio includes complexities for the 2005 tax year, such as an inheritance, real estate transactions, rental income or business divestiture. Choosing professional help may open up its own can of worms. Commercial tax preparation sites are located throughout the United States. And unlike a barber who is required to earn certification to cut one’s hair, commercial tax preparers are not required by Uncle Sam to obtain credentials that would certify they are qualified to do the job. Investigators for the nonpartisan General Accountability Office (GAO) recently issued a report that suggests taxpayers ought to be choosy when it comes to selecting and paying for professional advice. The audit, which involved major tax preparation chains, found that the preparers made serious mistakes. From super-sized refunds to failure to apply deduction or credits to which the taxpayer was entitled, the GAO discovered big-time mistakes. As with any consumer issue, I would suggest taxpayers remember tried-and-true rules of thumb. If it (refund) sounds too good to be true, it probably is. And take into account the preparer’s reputation, experience and customer referrals before entrusting personal financial information. Don’t forget taxpayers are legally and financially responsible for the information included or omitted on their tax returns. As chairman of the tax-writing Senate Finance Committee, I am considering licensing requirements for tax preparers.
Q: What other tips do you have for procrastinating taxpayers?
A: Since April 15 falls on a weekend this year, Iowa taxpayers have until midnight on Monday, April 17 to get their returns postmarked. In the haste to get a return mailed or e-filed by the deadline, don’t get hasty and forget to dot the i’s and cross the t’s. Thoroughly proof the math and review the numbers. Double-check Social Security numbers, names and signatures. Before sending the return off to the IRS, make sure it includes all the necessary attachments, schedules and payment. Remember, if filing a six-month extension (Form 4868) to complete paperwork, this does not extend the amount of time to pay taxes owed. If payment on taxes owed is not paid by April 17, interest and penalties are charged. Tax forms are available at many local libraries, post offices and the IRS website, www.irs.gov. Don’t hesitate to call the IRS toll-free at 800/829-1040 with last-minute questions.