Introduction
The issue of Tax refund, identity theft and hiding money overseas is critical to the people of the United States. They value their money and would like the government to address the emerging issues that link to these trends. The paper discusses these three trends in light of IRS rules and regulations.
Sensibly, in 2017, issues on tax refunds have been critical. For instance, there is delay for tax refunds; there exist new tax laws and the issue of introduction of tax refunds to small businesses. Unclaimed refunds come in when the government owes money that you fail to collect. Each year, the Internal Revenue Service has unclaimed refundable money that accumulates to more than $1 billion. Collectively, government agencies have about $58 billion in unclaimed refunds. The largest source of this unclaimed funds is the tax refunds that occur primarily because the amount of money paid as income taxes is more than the amount of taxes owed (Internal Revenue Service, n.d.). Tax refunds mostly apply to people earning a little amount of money that doesn’t reach the taxing threshold. The IRS may still withhold some amount from their salaries that are refundable if the workers file tax return. The money usually can be refunded unless the deadline to receive them has passed.
In 2011, the IRS stated that it had up to $153.3 million dollars awaiting pickup by their rightful owners. In March 1st, 2017, the Internal Revenue service indicated that it had about $1 billion in unclaimed funds to people who have not filed the 2013 income tax returns (Internal Revenue Service, n.d.) This money is at risk of being the U.S. Treasury property if it will still be unclaimed. The tax refunds form the largest part of the unclaimed funds. The other sources of unclaimed funds are unpaid back wages, life insurance funds, and savings bonds, among others. Attributable to the above justifications named above, this paper in writing seeks to discuss unclaimed funds with regards to taxation.
Trending Concerns of Unclaimed Tax Refunds
Similarly, another critical concern that troubles the taxpayers this year is the new tax refund law. The New law designates that tax refunds are set to be effected starting from 15th, February. The new law on tax refunds bases on refundable tax credits that are Earned-Income Tax Credit and the Additional Child Tax Credit. Tax refunds can cut the tax liability on a taxpayer to null. Subsequently, if the refundable credit is higher than the tax liability, then one is legible for a tax refund. This implies that one gets a refund up to the amount equivalent to the tax liability, subsequently; it does not provide provision for excess nonrefundable credit. Sensibly, this is a major blow to the tax payers, since their excess refundable taxes are withheld by the IRS hence benefiting the government at the expense of the taxpayers.
Till date there exists nearly a looming delay in regards to tax refunds. The tax season ended on April 18th, nevertheless, the tax refund is a program that targets to curt poverty, yet it is not fully utilized. The filing of tax returns in 2017 began on Jan, 23rd, however the refunds did not start being released by the IRS until after February 15. This is due to the new laws that designate the IRS to push the dates to Feb, 15th. The delay targets to give more time to the agency to audit returns to curb fraud. The delays this year has lasted for several weeks, and not only protects people from identity theft, but also safeguards them from fraud. After the IRS had reviewed all the necessary documents, the applicants of the tax refund received them after 21 days. It is unclear if the delay will still continue to next year.
Again, section 41 (h) and 3111 (f) has been a topic of discussion. The act provides the guidance on how small enterprises should implement tax refunds is a reprieve to the small businesses based on the U.S. The act defines what Taxation is a heavy burden to any business. Therefore, permitting small business owners to seek tax refunds is a critical move to enhance mushrooming of small businesses hence leads to growth of the economy.
Unclaimed Refunds statistics
Failing to file for income tax has deeper repercussions than the getting your unclaimed funds. The people cannot get access to their Earned Income Tax Credit, which is a significant credit to the poor households. The state and federal rebates differ in the amount (Fowles, 2015). The estimates from IRS claim that Texas is the state with the highest total potential for refunds with about $104,000,000 failing to claim their tax refunds. The second state is California with about $93,000,000 in potential refunds. The refunds are for about 97,200 people (Erb, 2017). New York comes third with about $59,416,000 in refunds for approximately 54,700 people.
Claiming a tax refund
If a taxpayer is due a tax refund, they have a three-year window period following the return date to request the money owed to them by the IRS. Claiming the tax refund requires details from the W-2, 1098, 1099 or 5498 forms. After filing for the annual income tax, the money is issued in a few weeks after the day the claim was filed (Lenell, 2014). The tax refund is paid in personal checks, direct deposits to the person’s bank, or U.S. Savings Bonds.
The refunds are done through personal checks that are sent to the last recorded address. Sometimes the checks fail to arrive because the recipient moved without changing the address. This is still another source of tax refunds (Internal Revenue Service, n.d.). The tax status is done annually which is a huge disadvantage to the people are new in the workplace or have been unemployed for an extended period. The IRS makes warnings that the money may still be held even after claiming it if the income tax returns are not filed.
IRS notices
If the funds are still unclaimed, the IRS may send a notice informing the party that IRS has not received tax returns for a particular year. They also include information on the three-year statute of limitation on the refund. This message serves a warning, and the recipients should file their tax returns immediately. If the party receiving the notification has filed for the tax returns eight weeks before receiving the letter, then the person can file for a second tax return.
Delivery of the refund
The best way to ensure that the refunds are delivered in a timely manner is by selecting the personal bank deposit method. Bank deposits remove the possibility of misplaced or lost checks. The best way to apply for tax refunds is electronically as the IRS will acknowledge receiving the document electronically. The form 8822 should be used when a person is changing the address to avoid lost checks. The IRS has a toll-free number that can be used to check on the status of the check and to confirm the changing of the address (Dean, 2016).
Organizations helping in collection of the refunds
There are organizations that are dedicated to ensuring that the $1 billion reaches the over 20 million people that it is owed to. Some of the organizations help the people fill their tax return forms and follow up on the status of the refunds. They help with all type of tax returns including American Opportunity Credit, Earned Income Tax Credit, the Residential Energy Credit, and the Child Tax Credit. Some of these organizations are accounting firms (Jackson Hewitt Tax Service Inc., 2015).
Identity Theft
This type of theft burdens its sufferers and also is way challenging for the organizations and other governmental institutes, counting the IRS. The IRS fights such identity thefts specifically the tax-related ones. It has established a strategy where care is a must, and it involves prevention, recognition and victim assistance. IRIS is working for the betterment in this case, and IRIS considers it as their priority and is giving major importance to it (IRS, 2015). Such a ‘Tax-related identity theft’ takes place only when a person makes use of the Social Security number to register a tax return. Such a tax return claims a deceitful refund.
In the year 2017, the IRS along with the states and the tax industry espoused to declare new barriers for fighting this theft. Many of such measures won’t be visible to the common people, but they are very important to fight these criminal groups (IRS, 2017). If one tries to log in for personal information, one must find new standards. Some other states are far advance in bringing these changes. To find details one must visit his state revenue agency’s website. One can imagine how bad such an act is, especially for the sufferers (IRS, 2017).
Hiding Money Overseas
Those tax filers within the United States who try to trickster in the case of their taxes which are to be paid. They cheat by investing in off-shore companies, or others who innocently get trapped in a scammer that promote an offshore tax scheme. Such innocent people also in the meanwhile forget to report such fraud schemes. Therefore, are expected to be fined heavily as reported by the IRS (Sahadi, 2015).
The IRS reports that it had involved many offshore schemes in audits and tracked criminal charges in the recent past, which resulted in fines of billion dollars and restitutions. IRS Commissioner John Koskinen says it is so bad if one tries to hide money in offshore companies, according to him the Taxpayers when themselves come forward they are served well.
To make people aware in this regard, the agency flung a program in 2009 named an Offshore Voluntary Disclosure Program. The program was based on the idea that, taxpayers who had many offshore accounts may notice the reduced penalties and to avoid criminal suit they may also change their minds. It is seen since last many years that there are many individuals found who are escaping U.S. taxes all by storing their money in offshore companies by hiding income in offshore banks, brokerage financial records or contender entities.And later they access their accounts using debit cards, credit cards or using wire transfers. Whereas, there are others who employ foreign trusts, employee- hire schemes, special allowances or indemnification plans to carry out the same act (Sahadi, 2015).
The IRS makes use of the knowledge gathered from its inquiries to trail the taxpayers having secret accounts; its aim is to find their supporters too, for instance, the bankers sitting outside helping them to hide their money overseas. IRS is helped by the Department of Justice in this regard. There can be genuine reasons behind offshore assets, but they must be reported. Those U.S. taxpayers who do not report rather keep secret accounts are criminals according to the law; they are liable to prosecution and heavy fines. Since 2009, many came forward to report voluntarily, to get benefits from the U.S. tax system and to resolve the blames (IRS, 2016).
By the start of 2012, the IRS re-launched the Offshore Voluntary Disclosure Program (OVDP) as dedicated taxpayers, and tax practitioners showed great interest. This program was not limited to a period will stay open for an indefinite period.
Third-Party Reporting
Under the Foreign Account Tax Compliance Act (FATCA) and intergovernmental agreements (IGAs) between the U.S. and other partners, there started the automatic reportage by a third party. Making sure that more of the offshore accounts would be reported to the IRS. Along FATCA and IGAs, the Department of Justice’s Swiss Bank Program also aids in reaching non-prosecution contracts made with Swiss financial institutions that were the facilitators in the past (IRS, 2016).
Conclusion
The IRS may hand in more than $500 million annually from uncollected taxpayers’ money. This money comes from both credit offered to the people earning a low income and paying more income tax than required. Other factors could also affect the presence of the refund. The refunding process is very easy, but still, most people fail to claim the money. Every citizen should file their income tax annually to avoid giving the government interest-free loans. The cities with the highest owed amount are Texas, New York and California. People should keep their information up to date when dealing with IRS to avoid losing their refunds to the government. Identity theft also burdens its sufferers and is way challenging for the organizations and other governmental institutes, counting the IRS. The IRS fights such identity thefts specifically the tax-related ones. The problem of hiding money overseas is also increasing. Tax payers cheat by investing in off-shore companies, or others who innocently get trapped in a scammer that promote an offshore tax scheme.
References
Americans they can still claim 2011 tax refunds. (2015, March 24). Business Wire http://www.businesswire.com/news/home/20150324005258/en/Jackson-Hewitt%C2%AE-Reminds-Hard-Working-Americans-Claim-2011/
Dean, J., (2016, May 11). Unclaimed tax refunds stay locked up on debit cards.
Erb, K. P. (2017, March 1). IRS says it has more than $1 billion in unclaimed tax refunds. Forbes.com. https://www.forbes.com/sites/kellyphillipserb/2017/03/01/irs-says-it-has-more-than-1-billion-in-unclaimed-tax-refunds/
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Jackson Hewitt® reminds hard-working
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