Q&A: Tax Filing Season

Q: What tips do you have for Iowans this tax filing season?

A: For starters, file your tax return on time to avoid interest, fees and other penalties. The good news is that taxpayers have a few extra days to file this year. The federal tax filing deadline for 2017 falls on Tuesday, April 18. That’s because the standard deadline, April 15, is on a Saturday this year and the IRS will be closed for a legal holiday (Emancipation Day, which observes the 1862 law ending slavery) on Monday, April 17. For filers needing an extension, be sure to file Form 4868 or make a payment by the April 18 filing deadline to avoid late payment penalties. Note the automatic six-month extension is a grace period for filing, not an extension on taxes owed; and, interest accrues on unpaid taxes. The IRS offers free online software service options for those with incomes below $64,000 a year and online fillable forms for those with incomes above $64,000 who file taxes on their own. Click here to learn more. Free tax filing assistance is available in person for individuals earning less than $54,000. Find the nearest IRS-approved Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs here.

Q: What tips do you have for Iowans worried about identity theft?

A: Besides scratching this annual duty off your to-do list, filing early comes with another advantage. Early filing can help protect taxpayers from tax fraud. Fraudsters are increasingly using tax filing season as their personal ATM machine by stealing personal information and filing a bogus tax return to illegally claim tax refunds. And often, it’s not until the genuine taxpayer files his or her taxes that the theft is discovered. When that happens, the unsuspecting taxpayer must jump through hoops needed to straighten things out. According to the Federal Trade Commission, tax identity theft is the largest category of identity theft complaints, accounting for more than 45 percent of all identity theft complaints in 2015. It’s often said that the early bird gets the worm. So, for Iowans expecting a tax refund, file as early as possible to redeem it before unscrupulous wrongdoers try to cash in on your refund. For Iowans who do suspect fraud, report the incident immediately with the IRS by calling (800) 908–4490.

It’s also important to remember that the IRS sends official communication by U.S. postal mail. It does not initiate contact or ask for payment by telephone or email. And it will not seek sensitive personal information through texts or social media messages. Don’t click links online seeking personal information. These are all red flags. Last year I introduced the Tax Return Identity Theft Protection Act to increase penalties for identity thieves, especially those who target vulnerable citizens. As a senior member of the Senate Finance Committee, which has legislative and oversight authority of the IRS and federal tax laws, I will continue working to improve policies to curb tax identity theft and discourage tax cheats. My decade-old provisions to improve the IRS whistleblower office already have helped to collect more than $3 billion since 2007. As a good government watchdog, I’ll continue working to sharpen public policy tools to protect law-abiding taxpayers.

Q: Will comprehensive reform and tax simplification be ready by the next tax filing season in 2018?

A: That arguably would be every taxpayer’s dream come true. Our system of voluntary compliance depends on all taxpayers paying every dollar legally owed. Unfortunately, tax simplification is much easier said than done largely because the federal tax code is so complicated. Simplifying the tax code would improve fairness and unlock tremendous economic growth. Too much money is either spent or locked up to minimize one’s tax burden. During my annual 99-county tour across Iowa, comprehensive tax reform comes up at nearly every meeting. Day in and day out, Iowans who manage a household or run a farm or small business make financial decisions that take into account spending, saving, borrowing and investing decisions. The same goes for taxes. Ronald Reagan’s guiding principle rings true today regarding his leadership 30 years ago to make the tax system “fairer, clearer and less burdensome for all Americans.” He said the whole idea boils down to a few words: “Freedom, freedom, and more freedom.” Tax simplification will improve fairness and reducing the tax burden will expand the economic pie. That will serve up bigger slices of revenue to pay for public services and pay down the debt. Work is under way between the White House and Congress to simplify the tax code, end the death tax, reduce marginal tax rates and reduce corporate tax rates to restore America’s competitiveness. Lessening the tax burden will increase the tax base, foster economic growth, expand prosperity and ideally create more jobs. Although it’s too early to say what the final product will be at this point, I will work to expand freedom and restore liberty for hard-working taxpayers. And that includes bringing Iowans’ views to bear at the nation’s tax policy tables.