On the eve of the income tax filing deadline, U.S. Sens. Chris Murphy and Richard Blumenthal warned of unscrupulous practices by tax preparers who prey upon moderate- and low-income individuals.
A recent U.S. District Court decision found that the Internal Revenue Service doesn’t have the ability to regulate tax preparers. Murphy and Blumenthal said Monday that Congress needs to take action to regulate predatory practices.
“You shouldn’t have to pay $400 to $500 to a tax preparer,” Murphy said.
He said that year-after-year they hear horror stories from constituents who have gone into storefront tax preparers and have walked out paying more in fees than they got back in refunds. He said they also hear about tax returns prepared incorrectly and those that have led to audits.
“It’s time for Congress to pass a law giving the IRS the ability to regulate these tax preparing services to make sure Connecticut residents are only getting the best tax advice,” Murphy said.
He said many of the families being preyed upon by these tax preparers qualify for the Earned Income Tax Credit.
Galo Rodriguez, president and CEO of the Village for Families and Children, said the average tax return received by those who file for free with the Volunteer Income Tax Assistance program is $1,600.
Anyone who makes less than $52,000 a year can file for free at one of these volunteer centers sponsored by both the Village for Families and Children and the United Way in the Greater Hartford and Windham County area.
Maura Cook of the United Way said the community benefits from the program because the Earned Income Tax Credit dollars are invested back into the community. The working families who qualify for the tax credit often don’t have to pay any income tax because their income is low.
The state approved a program in 2011 that gives those residents a similar credit estimated at about 27 percent of the federal tax credit.
She said the Volunteer Income Tax Assistance program has grown over the years. In 2003, it served 3,000 taxpayers and in 2013 it served more than 6,000 and “returned more than $26.4 million in federal tax refunds and credits back to families in our community, including more than $6.5 million in Earned Income Tax Credit,” Cook said.
So far more than 6,500 working families have availed themselves of the free income tax filing services offered by the United Way and the Village for Families and Children.
“Even though it’s a day before tax returns have to be filed, extensions are routinely granted,” Blumenthal said.
Blumenthal encouraged anyone with concerns to file an extension.
According to the Internal Revenue Service, more than 147,000 Connecticut residents will ask for an extension to file their tax return this year.
People who haven’t finished filling out their return can get an automatic six month extension. The fastest and easiest way to get the extra time is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic tax-filing extension on Form 4868.
Filing this form gives taxpayers until Oct. 15 to file a return. To get the extension, taxpayers must estimate their tax liability on this form and should also pay any amount due, according to a spokeswoman from the IRS.