Be careful of tax  preparers who claim they can get their customers “instant” federal income tax refunds.  They may not be giving their clients all the money they’re owed.

Some accountants offer “refund anticipation loans” as a “rapid” way to give customers tax refunds, but according to the New York City Department of Consumer Affairs, such loans are a fast way to lose money.

“Between the fees and interest rates that are charged for these refund loans, we’ve seen costs as high as a 500-percent rate when you take a look at what’s being borrowed,” says  NYC Consumer Affairs Commissioner Jonathan Mintz.

The loans are advertised as “fast” or “instant” refunds, but they’re really high-interest loans that lure people who do not want to wait the standard eight days to receive their refund from the Internal Revenue Service.

On Tuesday, DCA officials denounced such loans while announcing the results of a month-long citywide crackdown on over 800 income tax preparers.

“Three out of 10 preparers were misleading their customers about their rights and in most cases were telling them that a refund loan was somehow just a ‘rapid’ refund or a ’same day’ refund, and that kind of advertising is deceptive and illegal,” says Mintz.

The Bronx is the borough with the most offenders, with a 50-percent non-compliance rate.

“We issued over 2,000 violations to preparers across this sweep. Those violations which could total up to a million dollars in fines,” says Mintz.

However, the number of compliant tax preparers has increased from last year.

To protect yourself when purchasing tax preparation services, the DCA offers the following tips:

• Avoid “instant,” “rapid,” “same day” or “fast cash” refunds. They’re actually loans with extremely high interest rates.

• Know your rights. Tax preparers must post their qualifications, fees and charges and must give a consumer bill of rights. They must sign every tax return and provide you with a copy of your return and a receipt.

• Protect yourself. Tax preparers may not charge you fees based on the amount of taxes you owe.

• Never sign a return that is blank, incomplete or filled out in pencil.

• Do not pay cash.

Protect yourself and your federal income tax refund by choosing a reputable tax preparer.  If you’re having trouble finding a good tax preparer, ask a family member or a friend.  Advice from a trusted source should put your worries at ease.

source:  ny1.com

Do you think the IRS has a heart? Well, the Internal Revenue Service wants you to think so. Although the IRS has historically been cold-heartened and downright ruthless, it appears they recognize that many taxpayers are having difficult times financially. There can be a tax impact to events such as job loss, foreclosure, bankruptcy or tapping a retirement fund that may result in you not being able to pay your federal income tax. The IRS wants to help, sort-of, by providing this advice for those of you who can’t pay your taxes.

So what do you do if you can’t pay your federal taxes?

“The first thing to do is not panic. If you cannot pay the full amount of taxes you owe, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. You also should contact the IRS immediately to discuss your payment options at 1-800-829-1040. The agency may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise. In some cases, the agency may be able to waive penalties. However, the agency is unable to waive interest charges which accrue on unpaid tax bills” as is stated on the IRS website.

If you will owe a significant amount of federal taxes and can’t pay it, one of best things to do is consult with a tax attorney before you contact the IRS. The tax attorney will go over your situation, give the options available and make you feel more at ease. If you decide to hire the tax attorney, he can represent you in your case with the Internal Revenue Service

source: irs.gov

Federal tax help is now available for American taxpayers for the 2009 federal income tax season. The Internal Revenue Service has updated the 2009 IRS Tax Guide on it’s website www.irs.gov.

Taxpayers can look forward to getting their income tax questions answered and discovering the various tax breaks and deductions available this year. Many of these federal income tax breaks and tax changes are due to the American Recovery and Reinvestment Act of 2009.

The newly revised Publication 17, “Your Federal Income Tax”, is a comprehensive guide that features details on all the new tax-saving opportunities, such as the Making Work Pay credit, the education credit for parents with youngsters in college, the energy credits for homeowners going green, and those for first-time homebuyers.

The 308-page guide provides almost 7,000 interactive links to help taxpayers quickly get answers to their federal tax questions.

Publication 17 has been produced annually by the IRS for more than 65 years and has been available on-line since 1996. As always,, the tax guide is packed with tax-filing information and tips on what income to report and how to report it, figuring capital gains and losses, claiming dependents, and some basics such as choosing the standard deduction versus itemizing deductions.

To get Publication 17, go to www.irs.gov and enter “17″ in the search box in the upper right corner of the home page or use this link 2009 IRS Tax Guide.

Printed copies of the tax guide will be made available in January 2010. To request a copy or need federal tax help - call 1-800-829-3676.

source: tallahassee.com, irs.gov

One of the most common income tax questions is what will happen if I fail to file a federal income tax return.

First of all federal income taxes are based on the amount of tax due. So if you don’t owe any taxes, no penalties are due.

However, there is a civil penalty for failure to file a timely return. According to one income tax attorney, the civil penalty is generally between 5.0% and 25% of the amount of tax required to be shown on the federal tax return per month. In addition, there is an additional civil penalty for failure to pay the tax actually shown on the federal tax return. This is between .05% and 25% of the tax amount due each month. Income tax lawyers state the two penalties are computed together in a complex algorithm that makes estimating the actual penalties a challenge.

According to some estimates approximately three percent of taxpayers avoid the process of income tax preparation and do not file an income tax return at all.

In cases where a taxpayer does not have enough money to pay the entire tax bill, the Internal Revenue Service can work out a payment plan. Tax experts recommend that people in this position should at least consult with an income tax attorney to explore their legal options regarding the overdue tax debt.

There is no statute of limitations on civil actions by the IRS for years for which no return has been filed.

For each year a taxpayer willfully fails to timely file an income tax return, the taxpayer can be sentenced to one year in prison.

Taxpayers who have not filed income tax returns are recommended to meet with their accountant or an income tax attorney.

source: wikipedia.com