Are American Tax Rebates Useful?
Some Rebates are not Automatic
Americans see the word "rebate" and often expect to receive something very soon. However, they may not be entitled to the rebate, a fact they do not understand.
For example, the George W. Bush Administration's Tax Rebate on 2007 US federal income taxes provided an additional source of cash to taxpayers, but only if they were eligible. Everyone would not receive it and it was not to be mailed automatically to all.
Thousands of US taxpayers waited for the long-promised tax rebate of $300, $600, $1200, or even larger amounts. They became impatient and angry, especially since company downsizing was becoming a stronger trend under Bush.
The rebate was promised to eligible taxpayers by President Bush in late 2007 and early 2008, but took longer to materialize.
Rebate Spokesman - A Valid Voice?
Television commercials about this rebate were presented repeatedly, with a voice-over from a respected actor that has played an FBI agent on Numb3rs and a skilled doctor on Northern Exposure.
Rob Morrow's voice and image consistently bring to the mind of viewers a person they can trust. It led these taxpayers and others to trust the message that he delivered about the tax rebates of 2007-2008.
Tax rebates are more useful when they are delivered more quickly to their recipients, but the public service announcement by a respected actor helped people tolerate the delays.
Whenever a new tax rebate is announced, check the facts below to determine if you will receive the rebate. Also attend closely to any specific new terms of a tax rebate announced by the federal, state, or city governments.
Some taxpayers still did not understand that they must have actually filed a US Income Tax return for 2007 and must have earned income for 2007 through a PAYCHECK, not via a Form 1099 or other contractor pay schedule, and not through bartering, and not through self-employment.
This was true, unless they wrote themselves a legal paycheck from their own businesss, with all the legally required deductions shown, made, and paid to the government (check your own US State for the legal requirements).
The only people who received rebates were those who
- Received an actual paycheck from someone else or their own company if they owned one,
- Earned enough income to be required to file a US Income Tax Form.
People who did not qualify for the tax rebate were often angry.
People Who Were not Eligible
Individuals whose only income for 2007 was interest/dividends on savings and investments, Social Security and other retirement benefits, Workers Compensation, SSI, SSDI, and other types of disability benefits, public assistance ("welfare") cash payments, and similar payments and income were also not eligible for the tax rebate.
If they were allowed to work to a certain limit and still receive any of the above benefits, then if they received a paycheck in 2007, they could have the tax rebate.
Senior Citizens still working and receiving a paycheck along with their benefits could receive the rebate regardless of retirement income.
Identity Theft and False IDs Will Not Work
In addition, individuals working under false credentials, such as stolen or falsified Social Security Numbers or other faked taxpayer IDs could not benefit from the Bush Administration 2007 Tax Rebate, because they would likely not file taxes.
If these frauds decided to begin to file taxes in 2007, they would likely be caught in the crime(s) committed. A correct address must be presented in order to receive any tax rebate check. it is unclear whether that address can be a post office box, or must be an actual residential street address, but the street address is preferred.
If an individual files a Federal Income Tax form using someone else's Social Security Number and the actual owner of that number also files, then both people filing the return may be investigated when the discrepancy of two tax returns with the same SS Number reveals itself.
All records of paychecks and contractors' payments paid under a Social Security Number are available in a computer database, filed under the Social Security Number, through the Social Security Administration. This information is available to law enforcement agencies, departments of Jobs and Family Services, Child Support Enforcement agencies, and other agencies in each US State. Employees of these agencies check individual records in order to make sure that clients actual qualify for government benefits - and for other reasons.
The Underground Economy is Not Eligible
Individuals that work in the US underground economy are not eligible for the tax rebates, because they do not file tax returns. These individuals perform work for cash payments that ar4e usually never reported to the IRS.
Such work may include labor that actually requires board certification and a license, such as certain beauty salon services; but, the worker cannot pass the licensing exam or cannot afford the schooling and the cost of the board exam, along with the additional yearly license fee. However, practicing some beauty services and some other personal services without a license is illegal, depending on the state and federal regulations that apply. The underground economy can be a risky one in which to work and in which to patronize as a customer.
Practicing medicine or mental health therapy without a license is a crime in most US States as well. For instance, in Ohio, a practitioner must be either licensed and certified to perform hypnosis, or must be a Registered Nurse or higher (BSN, MSN, PhD in Nursing), a Nurse Practitioner, LSW or MSW or higher in social work, a professional possessing a Masters Degree or higher in Psychology, Counseling, Public Health, or Preventive Medicine, or have one of the few other designations allowed under Ohio law under the Ohio Board of Medicine.
However, there are some individuals that professionally attend alternative health exhibitions in Ohio, perform hypnosis and/or massage without training, education, or a license, pocket a cash-only fee without providing a receipt, and do not report the income to the IRS. Unfortunately, they are guilty of
1) failing to report income to state, local and Federal governments and
2) practicing medicine without a license in Ohio.They might be legal in other states
Thus, a number of crimes are committed in these instances and some visitors to these exhibitions have been seriously injured, resulting in yet another crime and unfortunate occurrence.
Note: Large hypnosis seminars provided short-term by professionals from out-of-state are labeled and advertised as "For Entertainment Purposes Only" and receive a stated ot unstated type of legal waiver, thus being allowed to perform.
Tax Problems With the IRS
The GW Bush Tax Rebate was not only a rebate, also a method for encouraging people to file taxes for 2007, if they have not been filing taxes in previous years.It was a means of gather up non-filers.
The promise of a rebate will actually increase a nation's tax base as people scurry to file taxes for the rebate and provide additional income to finance the Administration's activities, weather it is war or whatever else is on the agenda. In these ways, tax rebates are effective for the government.
Taxpayers that have been avoiding taxes in past years, but begin to file for 2007 or any tax rebate may risk penalties and fines for back or un-filed taxes.The fees may be waived in order to assure that the filer will continue to file in the future. However, a rebate may not be issued to the new filers, but applied against back taxes, penalties and fines, if any; and, the new taxpayer would be given an opportunity to work out a payment arrangement with the US Federal Government for the balance of the taxes and penalties owed.People that owe back
- Child Support,
- Disability or Public Assistance Overpayment, Spousal Support, some Law Suit losses, and
- Some Educational Loans will also not likely see a any other Tax Rebates.
The rebates will be applied against the back monies owed. These people, once found by the IRS, can face prosecution and even jail time in some instances the first two categories, and pursuit for the payment of certain educational loans, including wage garnishment.
Wise advice to those seeking any tax rebates in any year is to be honest and ask the Federal Government for help if they have not been paying their taxes. If they are illegal immigrants, they should come forward and ask for help in becoming documented or at least recognized guest workers.
People in jail do not make enough money to pay off back taxes in their lifetimes and given the tightening of the US legal system with the Patriot Act and increased technological surveillance, the underground economy will surely come to the surface faster than they expected. Good advice is to come forward and to ask for help before facing irrevocable legal consequences.
A tax rebate is not always effective or even wanted by everyone eligible for it.
© 2008 Patty Inglish MS