Posts tagged as:

tax-preparer

How much are you worth?

March 22, 2006 · 0 comments

Or put another way, how much does your tax preparer think you’re worth?

The Philadelphia Inquirer recently broke a story that the IRS has been keeping quiet…  It seems that, in an action labeled "not a significant regulatory action", a change in privacy laws was included in proposed rules published in December.  The change would allow tax preparers to sell information from tax returns, and quite possibly the entire returns, to third parties. 

The IRS defends the action, noting that tax preparer would require written consent before selling tax information.  Right. Since in the normal course of business, folks read everything put in front of them. 

Trust me.  I have prepared a lot of tax returns.  I don’t do personal returns anymore except at the local senior center, where I do them several times per tax season at an IRS-sponsored free clinic as part of the VITA (volunteer income tax assistance) program.  And paid or free, the reaction is the same.  The public feels that taxes are complicated and generally don’t want to be bothered.  They want to sign where you tell them and be done with the whole thing.  And more or less, most folks would probably sign anything you put in front of them.

The IRS, however, feels that signing written consents should be sufficient to protect your privacy.  Absolutely not.  The current regulations prohibit tax professionals from selling or releasing your private information to third parties.  That’s sufficent.

The IRS says that they have only received about a dozen responses to the proposal.  Perhaps that’s because nobody knew about it.  As a tax professional, I can certainly say that I was unaware of the proposed changes until I read about them in the Inky – and I subscribe to several tax blogs and tax news services.

The formal comment period has ended.  However, late comments may still be reviewed if they are received timely.  If you’ve got something to say, don’t delay.  Send your letters to:

CC:PA:LPD:PR (REG-137243-02)
Room 5203
Internal Revenue Service, Box 7604
Ben Franklin Station, Washington, D.C. 20044

{ 0 comments }

H&R on the Chopping Block?

March 22, 2006 · 0 comments

H&R Block has become the target of a number of lawsuits alleging wrongdoing.  Among them…

California is suing the company alleging that it has violated state and federal
laws in marketing and providing high-cost refund anticipation loans with interest rate exceeding 500%.  The laws which H&R Block are alleged to have broken include those regulating debt collection and contracts, false and deceptive advertising, unfair business practice and the sharing of individuals’ tax return information.  The complaint asks the court to pay restitution and fines, which could total hundreds of millions of dollars.

New York has also brought a $250 million suit against the tax preparation giant, alleging that the company improperly marketed money-losing IRAs to its customers.  The scheme, according to NY Attorney General Spitzer has resulted in more fees than interest for 85% of the customers in NY who purchased the IRA.

These lawsuits follow on the heels of a settlement filed in December 2005 to resolve claims in 22 states and the
District of Columbia related to the company’s controversial payday loans.  The exact terms of the settlement were not disclosed but the company will pay claims to 8 million customers
who took out payday loans between 1989 and 2005.  The lawsuits had alleged that the lending practices for these loans were deceptive, resulting in excessive fees and usurious interest rates.

A similar lawsuit has overcome legal challenges in Chicago, where a federal judge moved that racketeering charges against the tax company could stand.  The suit, which started with one plaintiff and has landed in federal court alleges fees and interest charged to consumers with annual rates of up to 2000%.

And complicating an already questionable fiscal year, the company reported that it had miscalculated its own taxes, resulting in a $32 million liability. 

Despite all of the bad news, the company remains optimistic, noting that although their numbers of customers were lower, their higher rates have resulted in a slight revenue increase.

{ 0 comments }