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Federal, state tax snafu’s cause grief for many Iowans

By James Grob, jgrob@charlescitypress.com

As far back as the Boston Tea Party in December of 1773, Americans have been complaining about taxes.

In April 2018, the state and federal governments have made more than 240 years of complaints seem justified.

Thousands of last-minute tax-filers on Tuesday were unable to file their federal returns due to a “high-volume technical issue,” the IRS said, while many Iowans who are expecting a refund from the state have been waiting longer than ever before.

Individual federal tax returns were due to the IRS on Tuesday, while Iowa income tax returns will be due on April 30.

The IRS announced early Tuesday evening that it is extending the federal filing deadline to midnight today (Wednesday) because of the problems encountered filing online Tuesday.

“This is the busiest tax day of the year, and the IRS apologizes for the inconvenience this system issue caused for taxpayers,” Acting IRS Commissioner David Kautter said in a statement.

No additional paperwork is needed to get the one-day extension, the IRS said.

“It was not a problem for us, as we had everything filed before today,” said Larry Pump, a CPA in Charles City. “I’m sure it was an upsetting situation for the people who waited until the last minute to file.”

Pump said that eventually the IRS offered a solution for taxpayers who had attempted to file but were unable to do so, and those taxpayers would not have to pay a penalty.

“It is my understanding if it was filed today but rejected, they would consider it postmarked today,” Pump said.

In Iowa, many citizens expecting a refund from the state have waited two months or longer and still haven’t seen their money.

The Iowa Department of Revenue has been saying that processing times will vary this year because of fraud prevention efforts and accuracy reviews, and doesn’t provide an anticipated date for refunds. It’s taking longer to give back tax refunds this year because officials are dealing with scammers. Many cyber-criminals are filing fake tax returns, trying to get someone else’s tax refund.

The added attention to fraud is the consequence of a state tax mess a few years ago. More than 10,600 Iowa tax returns were fraudulent in 2015, which was about 1 percent of all refund claims, the Iowa Department of Revenue reported. Of those, 2,333 refund claims used stolen identities from Iowa taxpayers.

“We’re expecting to pay off a couple bills, don’t expect to have much left over. If we do, it might be enough for a dinner and a movie,” said one Charles City resident, who was grocery shopping Tuesday afternoon. Although the shopper didn’t want to put her name on record, she said she worked part-time and was a mother of two. She also said it seemed like it has taken longer to get her returns the last couple of years, when compared to years past.

“My husband does our taxes through Turbo Tax, and he did them in late February. We already got our federal taxes back. We still haven’t gotten the state refund back yet.”

She said she wasn’t too upset about it, but acknowledged that it seemed unfair.

“If we’re late paying in, they start charging interest on day one. But we can’t charge interest on them when they’re late,” she said.

“I’ve had a number of clients who have seen that the delay in Iowa refunds has been four-to-eight-weeks,” said Pump, “which is unusual, because in years past, it was four-to-eight days. We’ve received a number of complaints.”

Revenue Department data show the state is issuing income tax returns at about the same pace as last year, when the department stopped $41 million in tax return fraud.

According to the department, it takes as long to stop a fake tax return as it takes to be sure Iowans get the tax refunds they deserve.

“The only consolation I have for them, is I tell them I’ve been hearing this from many people,” said Pump. “I tell them to be patient, they will pay you. It is your money, after all.”

All 41 Iowa House Democrats sent a letter earlier this year to Iowa Revenue Director Courtney Kay-Decker, seeking answers to questions about the refund delays, and the Iowa Department of Revenue has insisted that delays can be attributed to fraud investigation and not to inadequate cash reserves to pay refunds.

Pump said that one way to smooth out any bumpy tax situation is simply file your return as early as you can.

“The bottom line is, don’t wait until the last minute,” Pump said. “When you wait until the last minute, it can result in unhappy circumstances.”

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