Attention Procrastinators: Wednesday Is Tax Day
RENEE MONTAGNE, host:
A deadline looming Wednesday is the last day to file your federal taxes on time. And with the recession, it was a rough year for taxpayers. Some lost homes and jobs, which may raise a whole new set of tax questions. We asked Douglas Shulman, the IRS commissioner, to give us some tips for last- minute filers. He joined us in our studio in Washington, D.C. Good morning.
Mr. DOUGLAS SHULMAN (Commissioner, IRS): Good morning.
MONTAGNE: April 15th just a couple of days away. What last-minute bits of advice do you have for those procrastinators who still haven't gotten their taxes in the mail?
Mr. SHULMAN: Well, we know this is a tough economic time for a lot of Americans. They're struggling to pay their medical, their gas, their food bills. We think there is going to be a lot of taxpayers who are sitting there, they filled out their return, and they literally don't have the money to pay the government. The most important thing for them to know is they should send in their return. If they don't send a return, interests and penalties will stack up. If they can't pay, there's a form they can attach to their return.
They should send us what they can pay, and they should call us. We have the ability to work out a payment plan. We have the ability to compromise the debt if people really aren't going to be able to pay over time. So the most important thing for taxpayers to do in this tough economic time is not disappear. If they disappear, they'll end up in trouble with the IRS.
MONTAGNE: And obviously, some kind of toll-free number easily found and available?
Mr. SHULMAN: 1-800-TAX-1040, 1-800-TAX-1040.
MONTAGNE: Now is there one thing - or maybe a couple of things - that tend to trip people up as they quickly try and get through doing their taxes?
Mr. SHULMAN: The common mistakes are the simple mistakes. People make math errors. People transcribe their Social Security wrong. People don't sign the check that they send to the government. The best thing people can do is electronically file a return. Therefore, they'll be using software. They will have the math done for them. It'll double check to make sure all the information is there. The information will get to us, will get straight into our computers. And if you're getting a refund, like most Americans do, that refund will come to you quicker.
MONTAGNE: I'm sure a lot of people are wondering about this: Are there any benefits from the stimulus package that individual taxpayers can take advantage of this year?
Mr. SHULMAN: Absolutely. The American Recovery and Reinvestment Act was a very important bill that will hopefully get money into the pockets of American taxpayers. The president has asked every agency in government to make sure we work swiftly to get that money out to the American people.
There's a couple key tax provisions in the American Recovery and Reinvestment Act. You may be able to get a refund if you buy a home or buy a new car, and you can claim that on this year's tax return. And there's also things in that bill like subsidizing unemployment, health care through the COBRA system, that we're working with employers 'cause they actually pay it through their taxes.
MONTAGNE: Millions of people lost their jobs this past year, clearly something you're well aware of. Is the IRS doing anything in particular to help people who may not be able to pay their tax bill?
Mr. SHULMAN: A couple things we're doing. First of all, in the American Recovery and Reinvestment Act, there's a couple key provisions for unemployed people. People aren't going to pay any income tax on the first $2,400 of unemployment compensation that's paid to them. They also are going to get a subsidy from the federal government to pay their COBRA or their ongoing unemployment health insurance.
The IRS is also going to go the extra mile to work with taxpayers in difficult economic times. This is a fine line for us because we need to collect the money to fund the government, but we also need to be compassionate and understand each taxpayer as an individual.
So what we've done is given our front-line employees some special flexibility around areas where we think there's going to be difficulty with taxpayers. In the collection context, we've given people more authority to put on hold a collection action if somebody's going through a difficult time. We've given people authority to work through missed payments and allow a missed payment if they feel the taxpayer will get back and get right with the government later.
And we also understand that there's a number of people trying to stay in their homes, trying to either refinance or sell their home. And what we've done is made sure that a tax lien won't get in the way. So we'll actually put a tax lien second in line if someone's trying to refinance a home or sell a home so that they can stay in their home.
MONTAGNE: Douglas Shulman is the commissioner of the Internal Revenue Service. Thank you for joining us.
Mr. SHULMAN: Thank you.