Archive for October, 2012

Louisiana Department of Revenue announces enhanced effort to collect funds owed state

BATON ROUGE – The Louisiana Department of Revenue (LDR) announced Friday a new tool to enhance its efforts to collect overdue debts owed to agencies across state government.

The new Federal-State Offset Program will allow the state to intercept payments owed by the federal government to vendors and contractors for the payment of non-tax debts owed to the State of Louisiana. The program will collect an estimated $11 million per year.

Under this initiative, a participating state agency will submit to the program delinquent debts it has made extensive efforts to collect through communication with the debtor.  The program will match those debts to a federal database of taxpayers, vendors and contractors owed refunds or payments by the federal government.  If there is a match, the program will claim those refunds or payments and forward them to the state agency for payment of the outstanding debt.

For example, if a contractor for a federal agency owes fines or other payments to the Department of Health and Hospitals, LDR will claim any payments due the contractor from the federal government and forward them to DHH.

This program adds to the tools that LDR uses currently to collect overdue debts to the state. Since 2001, LDR has operated a program called the Federal Tax Refund Offset. Under this program, LDR intercepts federal income tax refunds to satisfy individual state income tax debts. The Federal Tax Refund Offset program has collected an average of $21 million per year for the state since it began in 2001 and a total of $137.2 million since July 2008.

The Federal-State Offset Program announced Friday complements an integrated strategy announced in September by Commissioner of Administration Paul Rainwater to streamline agency collection efforts across state government. 

LDR is developing an implementation plan for the program that includes a request for proposals (RFP) for a system to match Louisiana debtors with federal vendors and contractors.

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IRS: ‘Tax-filing and Payment Extensions Expire Oct. 15′

IR-2012-73, Sept. 28, 2012

WASHINGTON — The Internal Revenue Service is urging the estimated 104,000 Louisianans who requested an automatic tax filing extension until Oct. 15 to double check their returns for often-overlooked tax benefits and then file their returns electronically using IRS e-file or the Free File system.

Many of the more than 11 million taxpayers who requested an automatic six-month extension this year have yet to file. Though Oct. 15 is the last day for most people, some still have more time, including members of the military and others serving in Iraq, Afghanistan or other combat zone localities who typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due. People with extensions in parts of Louisiana and Mississippi affected by Hurricane Isaac also have more time, until Jan. 11, 2013, to file and pay.  (See list of affected parishes below.)

Check Out Tax Benefits

Before filing, the IRS encourages taxpayers to take a moment to see if they qualify for these and other often-overlooked credits and deductions:

  • Benefits for low-and moderate-income workers and families, especially the Earned Income Tax Credit. The special EITC Assistant can help taxpayers see if they’re eligible.
  • Savers credit, claimed on Form 8880, for low-and moderate-income workers who contributed to a retirement plan, such as an IRA or 401(k.
  • American Opportunity Tax Credit, claimed on Form 8863, and other education tax benefits  for parents and college students.

E-file Now: It’s Fast, Easy and Often Free

The IRS urged taxpayers to choose the speed and convenience of electronic filing. IRS e-file is fast, accurate and secure, making it an ideal option for those rushing to meet the Oct. 15 deadline. The tax agency verifies receipt of an e-filed return, and people who file electronically make fewer mistakes too.

Everyone can use Free File, either the brand-name software, offered by IRS’ commercial partners to individuals and families with incomes of $57,000 or less, or online fillable forms, the electronic version of IRS paper forms available to taxpayers at all income levels.

Taxpayers who purchase their own software can also choose e-file, and most paid tax preparers are now required to file their clients’ returns electronically.

Anyone expecting a refund can get it sooner by choosing direct deposit. Taxpayers can choose to have their refunds deposited into as many as three accounts. See Form 8888 for details.

Quick and Easy Payment Options

For unemployed workers who filed Form 1127-A and qualified to get an extension to pay their 2011 federal income tax, Oct. 15 is also the last day to pay what they owe, including interest at the rate of 3 percent per year, compounded daily. Doing so will avoid the late-payment penalty, normally 0.5 percent per month.

Taxpayers can e-pay what they owe, either online or by phone, through the Electronic Federal Tax Payment System (EFTPS), by electronic funds withdrawal or with a credit or debit card. There is no IRS fee for any of these services, but for debit and credit card payments only, the private-sector card processors do charge a convenience fee. For those who itemize their deductions, these fees can be claimed on Schedule A Line 23. Those who choose to pay by check or money order should make the payment out to the “United States Treasury”.

Taxpayers with extensions should file their returns by Oct. 15, even if they can’t pay the full amount due. Doing so will avoid the late-filing penalty, normally five percent per month, that would otherwise apply to any unpaid balance after Oct. 15. However, interest and late-payment penalties will continue to accrue.

Fresh Start for Struggling Taxpayers

In many cases, those struggling to pay taxes qualify for one of several relief programs, including those expanded earlier this year under the IRS “Fresh Start” initiative.

Most people can set up a payment agreement with the IRS on line in a matter of minutes. Those who owe $50,000 or less in combined tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment agreement for up to six years or request a short-term extension to pay. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS.

Taxpayers can also request a payment agreement by filing Form 9465-FS. This form can be downloaded from IRS.gov and mailed along with a tax return, bill or notice.

Alternatively, some struggling taxpayers qualify for an offer-in-compromise. This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, an offer will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay.

Details on all filing and payment options are on IRS.gov.

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 Parishes that qualify for tax relief due to Hurricane Isaac:

Ascension, Assumption, East Baton Rouge, East Feliciana, Iberville, Jefferson, Lafourche, Livingston, Orleans, Plaquemines, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Mary, St. Tammany, Tangipahoa, Terrebonne, Washington and West Feliciana parishes

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Barksdale AFB: ‘Know your local tax law’

The Public Affairs Unit at Louisiana’s Barksdale Air Force Base published the following article to make its readers aware of their responsibilities under state tax law.  It is reprinted here in its entirety:

Know your local tax law

by Staff Sgt. Chad Warren
2nd Bomb Wing Public Affairs

9/27/2012 – BARKSDALE AIR FORCE BASE, La. — Military members are frequently stationed away from their home of record, which can create some unique tax problems that may not affect civilians.

Despite following all of the rules and regulations, several Airmen have gotten into financial hot water over one issue in particular, Louisiana state taxes.

As employees of the federal government, income from military pay and allowances is not subject to Louisiana state taxes. However, non-military income earned in the state is taxable, according to the Louisiana Department of Revenue.

Each state has different tax requirements, and military members are subject to the rules of their respective state of residence.

“Louisiana currently does not have a system in place to determine which members are exempt,” said Capt. Anna Magazinnik, 2nd Bomb Wing Assistant Staff Judge Advocate.

The problem arises when people file their federal tax return. Even though the member may not be a legal Louisiana resident, they still must list a current physical address. The LDR then receives a list from the Internal Revenue Service of all physical addresses that did not file state taxes, this is called the Federal-State Match Program.

Once an individual is identified as delinquent, the LDR sends them a notice.
“A major issue is that the program is a few years behind,” said Magazinnik. “Members who have moved to their next duty station have notices sent to their former residence.”

An Airman may not even be aware of a collection attempt until the LDR garnishes their federal return, she added.

The 2 BW legal office is working with LDR to come up with a program to ensure local military members are taxed in accordance with the proper state laws, but in the mean time, any non-resident receiving a notice to file state taxes should contact the legal office immediately.

“The most important thing is to not ignore the notices,” said Magazinnik. “Bring a copy of your orders and a W-2 form to the legal office and we will handle the issue for you.”

The legal office has a process in place to notify the LDR of the error and prevent any future problems resulting in garnishment or legal action.

For more information regarding Louisiana tax law, contact the 2 BW legal office at 456-2562.

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