Attorney General Alerts
Don’t Double-Down on Tax DebtWed, Feb 25, 2015
In many cases, tax-relief companies know when they contact consumers who owe taxes, that these consumers are desperate to find ways to settle their tax debt with the Internal Revenue Service (IRS) or the State of Arkansas.
Tax-relief companies often claim they can reduce or even eliminate an individual’s tax debts and stop the collection of back taxes by applying for legitimate IRS hardship programs. The tax-relief companies don’t usually settle the tax debt and, in many cases, don’t even send the necessary paperwork to the IRS.
Arkansas Attorney General Leslie Rutledge issued today’s consumer alert to caution Arkansans to avoid falling victim to promises that they are “eligible” for tax relief, and to inform consumers of tax relief programs offered by the IRS.
“Don’t panic. That’s the most important thing consumers should remember if they have tax debt,” said Attorney General Rutledge. “The IRS has tax-relief programs to help Arkansans who owe back taxes or are behind on their payments, but consumers have to communicate with the IRS, otherwise, penalties and interest will accrue.”
Consumers should view paying taxes just like paying other bills. It is often better to negotiate a payment plan with the creditor than to pay someone else to finalize those details. The same is true when back taxes are owed to the IRS or the State.
Consumers who are having trouble meeting their tax obligation should avoid the following:
- Companies that make promises that consumers are “eligible” or “qualified” for a tax-relief program. Only the IRS can make that determination.
- Programs that won’t allow for in-person meetings before discussing payment.
- Any program that asks for upfront fees or advance fees.
- Any program promising results that seem too good to be true. As with paying any debts, programs that offer massive reductions from a total bill, should raise a red flag.
The IRS offers the following tax-relief programs to help consumers who owe taxes:
- An Installment Agreement is generally available to people who can’t pay their tax debt in full at one time. The program allows taxpayers to make smaller monthly payments until the entire debt is satisfied.
- An Offer in Compromise (OIC) lets taxpayers permanently settle their tax debt for less than the amount they owe. The OIC is an important tool to help taxpayers in limited circumstances. Taxpayers are eligible only after other payment options have been exhausted and their ability to pay has been reviewed by the IRS.
- In very limited circumstances, the IRS may offer penalty abatement to consumers who haven’t paid their taxes because of an unusual hardship. If the taxpayer meets very narrow criteria, the IRS may agree to forgive the penalties. Interest abatement is even more limited and is rarely provided.
According to the IRS, Arkansans can apply for an Installment Agreement, OIC, or penalty interest abatement without the help of a third party. If third-party assistance is preferred in negotiating with the IRS, only certain tax professionals — Enrolled Agents (federally-authorized tax practitioners who can represent taxpayers before all administrative levels of the IRS), Certified Public Accountants (CPAs), and attorneys — have the authority to represent taxpayers. Their services should involve a face-to-face meeting where they explain all options and their fee structure.
The Taxpayer Advocate Service is an independent organization within the IRS that provides free help to people who are experiencing financial difficulties or who need help resolving a problem with the IRS. Call (877) 777-4778 or visit www.irs.gov/advocate.
For more information about this and other consumer issues, visit the Attorney General’s website at www.ArkansasAG.gov or call the office’s Consumer Hotline at (800) 482-8982.
Don’t Get Stormed TwiceThu, Feb 19, 2015
Ice and snow can take a toll on trees and cause other property damage, and with the recent winter weather that moved across Arkansas, many are faced with the reality of cleaning up.
Some Arkansans will choose to make property repairs on their own, but others may seek assistance from home-repair professionals or tree-removal specialists. Although most contractors are reputable, others may attempt to take advantage of Arkansans in the wake of this week’s snow and ice by overcharging or under delivering on promised work.
Arkansas Attorney General Leslie Rutledge issued today’s alert to urge consumers to be cautious as they seek professional clean-up help, and to be aware of scams related to debris removal.
“Cleaning up following winter weather can already be time-consuming and costly without a consumer being taken advantage of by con artists,” said Attorney General Rutledge. “After storms, scammers see an opportunity to take advantage of Arkansans. Many times, if consumers get estimates and speak with family, friends and neighbors, they can avoid falling victim.”
After the snow and ice melt, scammers typically target affected neighborhoods. Using high-pressure sales tactics, these con artists get quick buy-in from those in need of urgent help. They may charge higher than normal prices, or so-called “emergency” prices, and demand up-front payment for services. Oftentimes, these con artists leave jobs incomplete or fail to begin the work at all once payment is received.
The Attorney General offered the following tips to consumers who need home-repair or tree trimming services:
• Select a reputable contractor. Always ask family, friends and neighbors for recommendations, and never be afraid to ask the contractor for references.
• Always get multiple estimates. Consumers want to act quickly to repair damages or have a tree removed, but getting at least three estimates to compare prices will save money in the long run.
• Get it in writing. A contract should contain details about the price of the project and any agreement on financing. It should indicate the exact work that is to be done, the type and quality of materials to be used, and the expected completion date.
• Never pay in advance. One option that should be satisfactory for both parties is an arrangement where one-third of the expected cost is paid in advance, a third is paid during the work and the final installment is paid at the time of completion. Consumers should always inspect the completed project before making final payment to make sure the completed work meets their expectations.
• Always handle insurance payments directly. If insurance payments are involved, consumers should deal with the insurance company directly rather than authorizing a contractor to negotiate with the company.
For more information about this or other consumer issues, visit www.ArkansasAG.gov or call the Attorney General’s Consumer Protection Division hotline at (800) 482-8982.
Bogus IRS CallsWed, Feb 11, 2015
Tax-return season is well under way in the Natural State and across the country, but with that comes scam artists looking to prey on consumers.
Recently, a number of Arkansans have contacted the Attorney General’s Office to report telephone calls from purported Internal Revenue Service (IRS) agents demanding the consumer share private information in order to receive a refund or to pay taxes immediately to avoid being arrested.
These con artists who have likely altered the caller ID to make it appear that the IRS is calling are posing as IRS agents in an attempt to steal a person’s identity or take their money. Arkansas Attorney General Leslie Rutledge issued today’s consumer alert to remind Arkansans to be cautious and to offer tips to help consumers recognize a scam.
“These scam artists can sound authentic and be very convincing, as well as demanding,” said Attorney General Rutledge. “But even the most sophisticated con artists will raise red flags alerting consumers to scams. Consumers should always remember that no government entity, including the IRS, will ask for your personal financial information through an unsolicited phone call or e-mail.”
The IRS recently reminded consumers how they can easily recognize scammers who call. Consumers should know the IRS will not do the following:
- Call to demand immediate payment or call about taxes owed without first having mailed you a bill.
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
- Require you to use a specific payment method for your taxes, such as a prepaid debit card.
- Ask for credit or debit card numbers over the phone.
- Threaten to contact local police or other law-enforcement groups to have you arrested for not paying.
IRS Commissioner John Koskinen said of these scams: “We have formal processes in place for people with tax issues. The IRS respects taxpayer rights, and these angry, shake-down calls are not how we do business.”
The Attorney General’s office again reminds consumers that the IRS does not use unsolicited e-mail, text messages or any social media to discuss a personal tax issue.
Arkansans who receive a call from someone claiming to be from the IRS or asking for money are encouraged to call the IRS at (800) 829-1040 or the Arkansas Attorney General’s Consumer Protection Division hotline at (800) 482-8982.
Prepping for Tax PreparationWed, Feb 4, 2015
Many times what makes Tax Day stressful is the procrastination of waiting to prepare those returns until the day they are due. Consumers should decide now how they will go about preparing tax returns — either prepare their own or seek assistance from a tax-preparation service.
Every year there seem to be more regulations and forms related to tax filing. Some Arkansas consumers may choose to seek assistance with tax preparations rather than crunching numbers and reviewing documents themselves.
Arkansas Attorney General Leslie Rutledge issued today’s consumer alert to encourage Arkansans to plan in advance how they will file their returns and to inform consumers about some of the free tax preparation options available.
“Remember: Nothing prepares us more than being prepared,” said Attorney General Rutledge. “Although some Arkansans file their own taxes without a problem, others may find the tax code to be too complex and tax-preparation services might be a better fit. While some of these services are costly, there are a number of free file programs available that are convenient and easy to use.”
The Internal Revenue Service (IRS) offers its Free File electronic tax filing program to all taxpayers through brand-name software or online forms. Taxpayers who earned less than $58,000 in adjusted gross income in 2014 are eligible to receive free online filing help. Visit www.irs.gov for more information.
The IRS also offers free, in-person tax filing and preparation assistance to qualified individuals through its Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) programs. The VITA program is available for those earning less than $52,000 a year as well as for members of the U.S. Armed Forces. VITA locations are staffed with trained volunteers in local community centers, libraries, and schools. Consumers may call (800) 906-9887 to find the nearest VITA location or visit the IRS website. The TCE program provides free assistance to those 60 years of age and older. Most TCE sites are operated through the AARP Foundation’s Tax Aide Program. For more information or to find the nearest TCE location, visit http://www.aarp.org/money/taxes/aarp_taxaide/ or call (888) 227-7669.
Consumers who choose to pay for help from commercial tax prep providers should keep these tips in mind:
- Shop around as cost may vary between providers.
- Choose a well-qualified, reputable tax preparer; taxpayers themselves are ultimately responsible for all information provided to the IRS.
- Read, review, and ask the tax preparer about any entries that may be difficult to understand before documents are filed.
- Ask whether the tax preparer has a Preparer Tax Identification Number (PTIN), which is issued by the IRS.
- Ask if the business is open year-round in case there are follow-up questions regarding a return.
Filing taxes is not optional, so spend some time now to prepare and file to make your 2015 Tax Day a little less stressful.
For more information on tax preparation, please visit the Consumer Protection Division at www.ArkansasAG.gov or call the division hotline at (800) 482-8982.
Beware of Refund-Anticipation ProductsWed, Jan 28, 2015
Paying off bills, setting money aside for a future vacation or building up savings are just a few examples of what many consumers plan to do with a tax refund, if they expect to receive one. Few, if any, have carved out plans to give a large portion of the refund right back to a tax preparer or financial institution.
Unfortunately, millions of American taxpayers do exactly that each year when they obtain “rapid” refund products such as Refund Anticipation Checks (RACs) or Bonus Deposit Checks. RACs are essentially high-interest loans which must be repaid by your actual tax return and in many instances are deducted directly from refund proceeds. Thus, consumers are essentially borrowing and paying interest on their own money, and sometimes the refund is less than the loan amount that needs to be repaid.
Arkansas Attorney General Leslie Rutledge issued today’s consumer alert so Arkansans will beware of refund-anticipation products.
“Nobody wants to wait on money that is owed to them and that they know is coming, but I encourage consumers to be wary of promises that are too good to be true,” said Attorney General Rutledge. “Arkansas consumers should exercise patience as they wait on their tax refund to arrive. While the offer of extra cash or an immediate tax refund can be tempting, it should not sway consumers from the risk.”
RAC lending has increased to an estimated 21 million taxpayers in 2013 and 21.6 million in 2014 according to the National Consumer Law Center.
RACs may be offered under other names, such as “instant refund” or “fast refund.” Some include an option for a taxpayers refund to be loaded on a prepaid debit card.
Companies that do offer these or similar products are required to comply with the Arkansas Refund Anticipation Loan Act. The Act, enacted in 2009, requires tax preparers to make some specific disclosures if they offer refund-anticipation product services.
Those tax preparers must prominently display a schedule of fees for the products. They must provide consumers with a printed notice that lists any and all conditions related to the RAC or other products. Also, the preparer is prohibited by law from charging any fees in addition to those assessed by a lender unless the fees are charged to all tax-preparation customers.
Consumers should be cautious if a product offers instant refunds or has add-on fees.
To avoid the high costs associated with refund-anticipation products, consumers should utilize the IRS Free File program. Everyone is eligible to file for free, but taxpayers who earned less than $57,000 in adjusted gross income can file for free using brand-name tax software. The Free File program was available starting Jan. 17, and the IRS begins accepting returns on Jan. 31.
Consumers looking to expedite their refund should consider e-filing. Taxpayers who e-file usually receive their refund within 8 to 21 days and the refund is direct deposited into their bank account. For those without a bank account, the refund can be direct deposited to a prepaid card.
For more information on “rapid” refund products or help with tax preparation, please visit www.irs.gov or go to the Attorney General’s website and visit the Consumer Protection Division at www.ArkansasAG.gov.
The Attorney General’s Consumer Protection Division hotline is (800) 482-8982.
We are Here to HelpWed, Jan 21, 2015
Arkansans engage in various transactions every day. From paying electric bills to purchasing toys and electronics, we all have something in common – we are all consumers. For the most part, these purchases occur with no issue, but when problems arise, the dedicated employees in the Consumer Protection Division of the Attorney General’s Office are here to help.
It is the goal of the Attorney General’s Office to help Arkansans resolve these consumer hitches as expeditiously as possible and with a positive resolution. The Consumer Protection Division put its experience to work for you, starting with the moment you call the office. Four front-line phone counselors stand ready to answer your call. The phone counselors are specifically trained to assist and advise consumers, no matter the situation. Counselors will also know how to direct you to resources on the Internet or to other agencies that may offer assistance. Most importantly, our phone counselors can help consumers file complaints with our office.
Newly inaugurated Attorney General Leslie Rutledge issued today’s consumer alert to remind Arkansans that the Attorney General’s Office is here to protect consumers. A change in administration will not change that mission – it will only enhance it.
“The Consumer Protection Division helps resolve thousands of complaints every year,” said Attorney General Rutledge. “Maybe you need help navigating a complicated vehicle purchase or you are being scammed on your cell phone bill. The dedicated counselors, investigators and assistant attorneys general of this division are ready to help. I will look at ways to enhance this division so that Arkansans receive the highest possible service and are protected from deceptive businesses and scam artists.”
The Consumer Protection team can be contacted from 8 a.m. to 5 p.m. Monday through Friday. Our consumer website, www.gotyourbackarkansas.org, is always available and accessible with helpful tips.
The goal of the Consumer Protection Division is to help you obtain a successful resolution to your consumer complaints. If you are having a problem, please contact our office – we are here to help!