The tax filing deadline of April 15 is fast approaching. Bill Brunson of the IRS and Anthony Forschino of the Arizona Department of Revenue will discuss the latest tax tips and tax fraud.
Ted Simons: The tax filing deadline is approaching, and every year there are new tax laws to consider and new scams to watch out for. Here to help us navigate this special time of year is Bill Brunson, spokesman for the IRS in Arizona, also with us is Anthony Forschino, spokesman for the Arizona department of revenue. Good to have you both here. Thank you so much for joining us.
Bill Brunson: Thanks for having us.
Ted Simons: I want to start with you, and sequestration. What's going on here as far as the IRS? All other federal agencies are getting hit. What's happening?
Bill Brunson: Right now we're not specifically certain as to how that's going to play out. So we expect that we're going to be furloughed for a number of days, but we haven't seen the exact, say, paperwork yet. They're supposed to notify the employees within 30 days of the event. But it hasn't yet come to be, so there might -- It might occur, it still might not occur, but we're waiting to see.
Ted Simons: OK. And real quickly, Arizona, I want to start with what seemed to have been a problem for a while with computer glitches regarding acknowledgment receipt of returns. What was that all about?
Anthony Forschino: What happened is it's really a small amount, what happened was in the beginning as we started, what we have to do is a reconciliation with the IRS. That means that we send our acknowledgments through the IRS to get to the person. That's how it goes. But sometimes there's some glitches as it goes, and what you get is, we do reconciliation with the IRS and say -- They say, you sent us an acknowledge, and we say yes, so we resend it. We had about 40,000 sitting in a hopper. Over the past weekend we took care of all of those 40,000. And what's funny is, even somebody at our work actually got filed, got their refund and then got their acknowledgment.
Ted Simons: So the delay was there, the delay is gone.
Anthony Forschino: Right. And it didn't mean the return wasn't being processed. It just meant the acknowledgment wasn't going.
Ted Simons: OK. Let's talk about electronic payment here. And the options that are out there with the federal tax system. What can I do as far as electronically filing?
Bill Brunson: Well, your payment with -- In that area, if you owe the federal government money and you owe less than $50,000, you can basically call the shots as long as you can pay that off within a five-year time frame. Now, if you're asking about electronically filed tax returns, that's the way to go. 80% of all Arizonans are going to file their return this year with 2.2 million, out of 2.8 million will submit it electronically. It's fast, accurate, secure. It saves the federal government money. It's truly a win-win situation for everybody.
Ted Simons: And you use credit or debit cards?
Bill Brunson: When you pay, yes. If you have a liability, you can use credit or debit cards. If you would like. That's certainly an option. Now, they're going to charge you a fee. That's a fee between you and that service provider. So just keep that in mind if you decide to go that option.
Ted Simons: Funds withdrawal, electronic fund withdrawals from your bank account, A-OK as well?
Bill Brunson: It certainly is.
Ted Simons: If you are -- If you file, if you -- What if you are unable to file? What choices do you have?
Bill Brunson: Run away. No. Basically you need to request the extension to file. It allows you an additional six months to submit the paperwork, not pay the tax. Then you want to request an extension before midnight Monday, April 15th, which is the due date for the return. There's no cost. And you don't have to make a supplemental payment with it. But you just need to make that request for the item before midnight Monday, April 15th. And you can do that online electronically, and you can do it for free on IRS.GOV's website through the free file option.
Ted Simons: This is -- If you're unable to file, not -- So if you're unable to file do you still have to pay something to keep things going here?
Bill Brunson: That was the old way. No. Is it a benefit to the taxpayer to pay what they can when they do file the return or request an extension? You bet, because it's going to save them penalty and interest. But it's not a requirement.
Ted Simons: I want to get to what happens if you're unable to pay here in a second. But back to the state. I notice there are some changes here regarding be the use tax and clean elections. Tell us what's changed over the year.
Anthony Forschino: The use tax is the tax you pay on purchases you make from out of state, online, that tax is not collected. Then you as the individual have to pay that. Last year there was a line on your tax return which allowed you to pay that tax. This year the line is removed. But the use tax is still owed.
Ted Simons: I -- Why is that?
Anthony Forschino: It was a legislative decision to remove the line from the return.
Ted Simons: So you're not even reminded, but you still have to do it.
Anthony Forschino: Right. In our booklet we do have a page that talks about it, and on our website and tells you where to pay it.
Ted Simons: As far as the future is concerned, this is kind of going the way of the DODO, right? Eventually you'll have to pay taxes on pretty much online purchases, aren't you?
Anthony Forschino: That's the direction most legislation, federal legislation all that is going.
Ted Simons: All right. As far as clean elections --
Anthony Forschino: clean elections always had a checkoff box on the return where you could donate $5 or $10 , then you got a reduction of five or ten, or you could give a donation and get a credit. That's been removed, so the checkoff boxes are no longer there. The credit is no longer there. The donation is no longer there. However, on this year's tax return, if you made a donation prior to August 2nd of last year, you can still take the credit for this year. Because the law went into effect on August 2nd. Any donations made before that is allowed.
Ted Simons: You better remember it, and there's no prompting.
Anthony Forschino: Exactly.
Ted Simons: What happens if you can't pay your tax on time? We talked about unable to file, what about payment?
Bill Brunson: There's going to be a late payment penalty of one half of 1%. So if you're an individual that, say, doesn't have all their paperwork together and has a balance due, they owe uncle Sam money, go ahead and request the extension to file, and you'll not have a late filing penalty of 4.5%, just a late payment penalty until that amount is paid off. Then what we recommend, the intern revenue service recommends, pay what you can and get formally billed by the system, then contact us and we'll work out a payment arrangement.
Ted Simons: These requests for relief can be made online?
Bill Brunson: Yes. You can go to IRS.GOV or pick up the phone or go by an office. So much is available online at IRS.GOV, it's amazing. You don't truly need to pick up the phone.
Ted Simons: Are there requests for relief that just don't cut it. At what point do you say, no. We can't work with you? Or do you always say, we'll find a way?
Bill Brunson: That's a very fair question. If the individual is reasonable with us and communicates, we're going to be reasonable with them. But if we see a history of where they vote for multiple years and haven't worked with us, that's a different story.
Ted Simons: OK. Real quickly, another change, state taxes here regarding STO, school tuition organization.
Anthony Forschino: The school tuition organization, they gives scholarships for private schools, is what's happening is the credit that's there is 500$ for single, a thousand dollars for married, which has gone up to and a 503 or thousand, six, because it goes by inflation. So it's an extra three dollars. A second credit has been created for another and another thousand dollars. So you can give up to a thousand or two thousand, dollars for that credit. And you can give it up to April 15th and still take it on last year's --
Ted Simons: very quickly, seconds left. What do we watch for? Biggest tax scam right now?
Bill Brunson: Probably a fishy tax scam, somebody offers a refund, seems plausible because you filed and you may not have gotten everything you thought could be coming to you, and they'll ask for personal financial information. Don't fall for it. The IRS already has your personal information. If you get something like that, and you're not certain, contact the IRS and we'll talk with you. Then you won't have a problem with scammers.
Ted Simons: Good stuff. Good to have you both here. Thanks for joining us. That is it for now. I'm Ted Simons. Thank you for joining us. You have a great evening.
Bill Brunson:IRS, Anthony Forschino:Arizona Department of Revenue;