Tax Filing Season Has Busy Start

Ten weeks into the tax filing season, the Internal Revenue Service has received over 46 million returns, about the same as this time last year, filled 3 million orders for forms or publications, and provided telephone or walk-in assistance to more than 34 million taxpayers, an increase of 14 million over last at this point. Tele-Tax, a phone service offering automated tax and refund information, accounted for about 12.5 million of the 14 million increase.

As part of its ongoing effort to ensure that only taxpayers entitled to refunds receive them, the IRS is checking names and Social Security numbers (SSNs) for taxpayers and their dependents. The IRS rejects an electronic return with missing or mismatched numbers, so the return never enters the system unless corrected. On a paper return, an SSN problem delays any refund while the IRS contacts the taxpayer.

With an electronic return, the taxpayer has the advantage of learning about a problem within a day or two and the ability to the error immediately. With a paper return, the taxpayer may not be aware of any problem until a notice from the IRS arrives weeks later.

Electronic filing continues to offer such benefits as greater accuracy, up front verification and acknowledgement of receipt, and a shorter processing time than paper returns.

Over 1,000 sites operating under the Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) program offer free electronic filing, generally for low-income taxpayers. Taxpayers can call the IRS at 1-800-829-1040 to ask about the availability of free electronic filing in their community.

The IRS is also reviewing all returns to ensure that refunds go only to those taxpayers entitled to receive them. While this review stops erroneous refunds from going out, the process may delay all or part of the refund for some qualifying taxpayers. About 4 million of the 32 million returns processed 80 far will have some delay.

The IRS will send notices explaining the delay to those affected. Although the IRS may ask for additional information to support some refund claims, most taxpayers will not have to do anything for the IRS to complete its reviews.

Taxpayers who face a significant hardship because of a refund delay may contact the IRS Problem Resolution Office by calling 1-800-829-1040. Significant hardships include imminent loss of housing or utilities and inability to obtain food, essential medical treatment or transportation to work. IRS representatives will consider the circumstances in each case and verify the hardship. When appropriate, the IRS will try to expedite issuance of the refund.

Taxpayers concerned about possible refund delays in the future can act now to put more money in their pockets throughout the year. A person getting last year's average refund of $1,066 could have had another $20.50 a week throughout the year instead.

Workers can reduce the amount withheld from their paychecks to more closely match their actual tax. They should use Form W-4 to figure their correct number of withholding allowances and give the form to their employers. The free Publication 919, "Is My Withholding Correct for 1995?," is also available from the IRS.

Taxpayers who have a child and will have less than $24,396 of income in 1995 may apply for advance payments of the Earned Income Tax Credit (EITC). Employers will add these payments -up to $105 a month -- to qualifying workers' paychecks. The advance payments equal 60 percent of the taxpayer's total EITC. The rest is added to the refund when the taxpayer files the tax return for the year. Form W-5 has the details on eligibility for advance EITC payments as well as the certificate that must be filed with the employer.

Forms W-4 and W-5 are available from employers or from the IRS at 1-800-TAX-FORM (1-800-829-3676).

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