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IRS WANTS TAX RETURN EVEN IF REFUND IS DUE

 SACRAMENTO, Calif., March 29 /PRNewswire/ -- As the April 15 filing deadline draws near, taxpayers with refunds due may think the Internal Revenue Service (IRS) is not particularly anxious to receive their returns. Given the national deficit, such taxpayers might wonder, perhaps the IRS would rather not receive refund-due returns so the government could keep the money.
 "That's definitely not the IRS attitude," said Fred Stine, EA, president of the California Society of Enrolled Agents (CSEA).
 "It's the responsibility of the IRS to secure a tax return from every person required to file," Stine explained. "The filing requirement remains the same whether you owe tax or the government owes you a refund."
 And it is certainly to the advantage of the taxpayer to file a refund-due return on time, according to CSEA. Interest does not accrue on a refund amount if a return is not filed, and the right to the refund disappears entirely three years after the due date of the return.
 Enrolled Agents (EAs) are individuals approved by the federal government to advise and assist consumers in all tax matters.
 "The IRS is prohibited from issuing a tax refund after the three-year period," Stine said. "Not in cash, not even as a credit against tax subsequently owed."
 Additionally, the statute of limitations (normally three years) for the IRS to examine or audit the tax status of an individual for a given year does not begin to run until the individual files that year's return.
 There is a very practical reason why the IRS wants a tax return even if a refund will be due.
 The tax system is based on disclosure and on keeping records. While the IRS has a record of wage and investment income earned (copies of forms W-2 and 1099), there may be other income involved. Without a tax return, the information in the system is substantially incomplete.
 "The IRS doesn't want to chase people around to get the information," said Stine, "and it certainly would not be cost-effective for them to do so.
 "We would all spend fewer tax dollars if everyone simply filed their return."
 At the state level, according to CSEA, the Franchise Tax Board (FTB) which collects California's income tax vigorously solicits returns from all persons required to file, even if a refund is due.
 If the FTB has evidence of income (such as a copy of a W-2) and no corresponding tax return, it issues a request for the return along with a penalty amounting to 25 percent of the total tax due for the year.
 If there is no response, the FTB will estimate the tax due without looking for deductions or other possible tax advantages. It then issues a demand for payment plus a penalty amounting to 50 percent of the total tax due for the year.
 In this situation, according to CSEA, it is not uncommon for an individual who originally had a refund coming to end up owing several hundred dollars.
 (Taxpayers who desire professional tax assistance can locate Enrolled Agents in their area by calling the National Association of Enrolled Agents toll-free at 800-424-4339.)
 -0- 3/29/93 R
 /CONTACT: Bill Sprague or Will Carnegie of California Society of Enrolled Agents, 916-366-6646 or 800-777-2732/


CO: California Society of Enrolled Agents; Internal Revenue Service ST: California IN: SU:

TM-GT -- SF002 -- 0447 03/29/93 11:03 EST
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Publication:PR Newswire
Date:Mar 29, 1993
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