Consumer eViews
         FLORIDA CHIEF FINANCIAL OFFICER ALEX SINK'S WEEKLY NEWSLETTER

         Volume 5, Number 13, March 28, 2008
 

Did you know that 1.5 million Floridians who are not normally required to file a tax return may be eligible for a federal economic stimulus payment? These Floridians – who receive Social Security, certain Veterans’ or Railroad Retirement benefits, or are low-income workers – will need to file a special tax return in order to get the tax rebate they deserve.

Note: Most Floridians will already be filing a 2007 tax return and will not need to take any additional steps to receive their federal economic stimulus payments.

This week, CFO Sink announced that the Internal Revenue Service (IRS) is offering free tax filing services on “Super Saturday” (March 29, 2008) at more than 30 locations around the state.

LIST OF IRS' FREE TAX FILING LOCATIONS

CFO Sink is encouraging all Floridians to help their parents, grandparents, family, friends and neighbors if they are entitled to a tax rebate this year.

For additional information on “Super Saturday” or other tax information, please visit www.irs.gov.


CFO SINK DESIGNATES APRIL AS FINANCIAL LITERACY MONTH

At a meeting of the Florida Cabinet, Florida Chief Financial Officer Alex Sink announced her resolution designating April as Financial Literacy Month. During the month of April, CFO Sink will raise awareness about the need for increased financial literacy among Floridians, as well as increased availability to financial information and assistance.

“Whether it’s purchasing your first home, saving for retirement or avoiding excessive debt levels, it is truly important for Floridians to make wise decisions with their financial resources,” said CFO Sink. “During the month of April, my office will be working to help educate Floridians about the importance of prudent money management and the resources available in their communities.”

CFO Sink is a strong proponent of financial literacy. Through regional outreach coordinators, her Department of Financial Services (DFS) aggressively educates consumers in their local communities on topics such as the wise use of credit cards, identity theft, hurricane preparedness, small business security, life insurance policies and first-time homebuyer workshops. During 2007, DFS conducted more than 2,680 outreach events around the state.

CFO Sink’s Financial Literacy Council was created to study the financial problems that affect consumers, particularly young persons, seniors, working adults and small business owners, which arise from a lack of basic knowledge of financial issues. The council will also develop recommendations to aid DFS in developing programs and resources aimed at increasing financial literacy among Floridians

For more information on financial literacy or the CFO’s Council please visit www.MyFloridaCFO.com.


STATEMENT BY CFO SINK ON THE SENATE BANKING & INSURANCE COMMITTEE’S PASSAGE OF CAT FUND PROPOSAL
 

Florida Chief Financial Officer Alex Sink applauded the Florida Senate Banking & Insurance Committee for unanimously passing Senate Bill 2156 by State Senator Bill Posey (R-Rockledge), which reduces the amount of exposure Florida’s consumers have to hurricanes.
 
“I thank Senator Posey and his Senate colleagues for their leadership and support of this bipartisan proposal to reduce the risk of hurricane assessments on Floridians and businesses,” said CFO Alex Sink. “With their support, we are eliminating the risk of $5.5 billion in hurricane assessments if we have a bad storm this year.”

The companion bill is HB 7021, sponsored by State Representative Ron Reagan (R-Sarasota/Bradenton).


CFO SINK DELIVERS FINANCIAL LITERACY ADDRESS TO FINANCIAL LITERACY COUNCIL

The Financial Literacy Council met on Monday afternoon on the 22nd floor of the Capitol to hear CFO Alex Sink speak about the state of Florida's financial literacy.

With the current state of the economy and many people faced with difficult financial decisions they don't understand, financial guidance and assistance are more important than ever.

The upcoming year may be a difficult one. The nation is bracing for tough economic times and Florida is facing an enormous revenue shortfall. Money for all kinds of programs will likely be scarce. And the need for financial literacy education is vital during these times.

The Council  is working to realize goals of increasing awareness of financial literacy and consumer education, building a single state resource on financial issues and aggressively increasing financial literacy outreach.     

In the year ahead, the council is charged with developing a strategic outreach plan and  building an interactive website that will provide education to Floridians about personal financial matters. That site will also connect people to resources available in their own communities.


CFO SINK COMMENDS STUDENTS, TEACHERS FOR INNOVATIVE “GREEN” VEHICLE

CFO Alex Sink recognized some special “green” guests at the Cabinet meeting this week. A "FryBrid" conversion vehicle was created by the K-12 Science Team Division of Curriculum & Learning Support and the School District of Palm Beach County.

Students Mike Haber and Richard Blair, and their teachers Thomas Knott, Deborah Bower, Thomas Metcalf, and science administrator Fred Barch, came to Tallahassee to promote their vehicle that runs on free, waste vegetable oil from cafeterias and restaurants. Representative Shelley Vana joined her constituents from Palm Beach County at the Cabinet meeting.

The team attempted to drive the “FryBrid” Mercedes from Palm Beach to Tallahassee, without purchasing any additional fuel for the trip. Unfortunately, the vehicle broke down in Gainesville, but the participants made the trip to Tallahassee anyway. The FryBrid is now on its way to Boston to attend and participate in the National Science Teachers Association Conference.

This is the type of innovation we need in Florida. More importantly, when talking about a first-rate education and teachers dedicated to the students of Florida, this is what the standard should be.

Thank you to the students, Mike and Richard, and their teachers for bringing such a great example of the potential of students and technology to the attention of Floridians.


GOVERNOR, CABINET CELEBRATE APRIL AS WATER CONSERVATION MONTH

Governor Charlie Crist and the Florida Cabinet today recognized April as Water Conservation Month. The Florida Department of Environmental Protection (DEP), together with the Florida Section of the American Water Works Association, endorsed the proclamation, reaffirming the state's commitment to increasing water use efficiency.

"Recognizing April as Water Conservation Month helps promote the importance of water conservation, encouraging Floridians to become environmental stewards at home and in their communities," said DEP Secretary Michael W. Sole. "By using water efficiently, we reduce the unnecessary waste of a precious resource, we extend supplies of water for our growing population, and we protect the state's natural resources."

Conservation is not about "doing without." Floridians can conserve water just by adopting efficient habits that reduce water waste:
  • Watering lawns can account for more than 50 percent of water use at many Florida homes or businesses. Irrigate your landscaping only when it actually needs it. Many homes with irrigation systems apply far more water than is necessary.
  • Choose landscaping suited to your location to reduce the need for irrigation. Learn about beautiful Florida Friendly plants at www.floridayards.org. There you can view and select the right plants for your home or business.
  • Replace old toilets that use up to five gallons of water per flush with high performance water-efficient toilets certified by the Environmental Protection Agency's WaterSense program (http://www.epa.gov/WaterSense/).
  • Showering is one of the top uses of residential water in the United States, representing approximately 17 percent of indoor water use. Replace old showerheads with new low-flow models that work just as well, but use less water.
  • Faucets account for more than 15 percent of indoor household water use. Replace old faucets with WaterSense approved faucets or aerators.
  • Fix water leaks. Homeowners lose an average of 25 gallons of water a day through leaky water devices.
  • Run your washing machine and dishwasher only when full and you could save 1,000 gallons a month. Consider buying a clothes washer that has a water factor of 6.0 or less by going to www.cee1.org.
  • If washing dishes by hand, don't leave the water running. You can save 200 to 500 gallons a month.
  • Repair dripping faucets. If your faucet is dripping at a rate of one drop per second, you can waste 2,700 gallons per year.

For information about Florida's water, visit www.dep.state.fl.us/water

For more green tips, visit www.dep.state.fl.us/green/tips.



Money-Smart Idea of the Week

Idea: Take advantage of tax-advantaged retirement plans

The sooner you begin saving, the more time your money has to grow. Gains each year build on the prior year's gains -- that's the power of compounding -- and the best way to accumulate wealth. Qualified plans such as the Individual Retirement Account (IRA) and 401(k) have tax advantages to encourage saving for retirement. 

Contributing money to a 401(k) gives you an immediate tax deduction, tax-deferred growth on your savings, and - usually - a matching contribution from your company.
 
Like a 401(k), IRAs offer tax breaks. There are two types: a traditional IRA offers tax-deferred growth, meaning you pay taxes on your investment gains only when you make withdrawals, and, if you qualify, your contributions may be deductible; a Roth IRA, by contrast, doesn't allow for deductible contributions but offers tax-free growth, meaning you owe no tax when you make withdrawals.


For more financial savings tips click here http://www.myfloridamoney.com/FLSaves.htm


IRS 'DIRTY DOZEN' LISTS TAX SCAMS TO AVOID

In March, the Internal Revenue Service issued its 2008 list of the 12 most egregious tax schemes and scams, highlighted by Internet phishing scams and several frivolous tax arguments.

Topping this year’s list of scams is phishing, which encompasses numerous Internet-based ploys to steal financial information from taxpayers. New to the “Dirty Dozen” this year is a scheme, which IRS auditors discovered, that relates to unreasonable and/or excessive fuel tax credit claims.

“Taxpayers should be wary of scams and promises to avoid paying taxes that seem too good to be true,” Acting IRS Commissioner Linda Stiff said. “There is no secret formula that can eliminate a person’s tax obligations. People should be wary of anyone peddling any of these scams.”

Tax schemes can lead to problems for both scam artists and taxpayers. Tax return preparers and promoters also risk significant penalties, interest and possible criminal prosecution.

The IRS urges taxpayers to avoid these common schemes:

1. Phishing

Phishing is a tactic used by Internet-based thieves to trick unsuspecting victims into revealing personal information they can then use to access the victims’ financial accounts. These criminals use the information obtained to empty the victims’ bank accounts, run up credit card charges and apply for loans or credit in the victims’ names. Phishing scams often take the form of an e-mail that appears to come from a legitimate source. Some scam e-mails falsely claim to come from the IRS. To date, taxpayers have forwarded more than 33,000 of these scam e-mails, reflecting more than 1,500 different schemes, to the IRS. The IRS never uses e-mail to contact taxpayers about their tax issues. Taxpayers who receive unsolicited e-mail that claims to be from the IRS can forward the message to a special electronic mailbox, phishing@irs.gov, using instructions contained in an article titled “How to Protect Yourself from Suspicious E-Mails or Phishing Schemes.” Remember: the only official IRS Web site is located at www.irs.gov.

2. Scams Related to the Economic Stimulus Payment

Some scam artists are trying to trick individuals into revealing personal financial information that can be used to access their financial accounts by making promises relating to the economic stimulus payment, often called a “rebate.” To obtain the payment, eligible individuals in most cases will not have to do anything more than file a 2007 federal tax return. But some criminals posing as IRS representatives are trying to trick taxpayers into revealing their personal financial information by falsely telling them they must provide information to get a payment. For instance, a potential victim is told by phone or e-mail that he or she is eligible for a rebate but must provide a bank account number (or similar information) to get the payment. If the target is unwilling, the victim is then told that he cannot receive the rebate unless the information is provided. Individuals should remember that the only way to get a stimulus payment is to file a 2007 tax return. The IRS urges taxpayers to be extra-vigilant. The IRS will not contact taxpayers by phone or e-mail about their stimulus payment.

3. Frivolous Arguments

Promoters of frivolous schemes encourage people to make unreasonable and unfounded claims to avoid paying the taxes they owe. Most recently, the IRS expanded its list of frivolous legal positions that taxpayers should stay away from. Taxpayers who file a tax return or make a submission based on one of these positions on the list are subject to a $5,000 penalty. The most recent update of the list of frivolous positions includes: misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending, erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States, a nonexistent “Mariner’s Tax Deduction” related to invalid deductions for meals and the misuse of the fuel tax credit (see below). The complete list of frivolous arguments is on the IRS Web site at IRS.gov.

4. Fuel Tax Credit Scams

The IRS is receiving claims for the fuel tax credit that are unreasonable. Some taxpayers, such as farmers who use fuel for off-highway business purposes, may be eligible for the fuel tax credit. But some individuals are claiming the tax credit for nontaxable uses of fuel when their occupation or income level makes the claim unreasonable. Fraud involving the fuel tax credit was recently added to the list of frivolous tax claims, potentially subjecting those who improperly claim the credit to a $5,000 penalty.

5. Hiding Income Offshore

Individuals continue to try to avoid paying U.S. taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore debit cards, credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance plans. The IRS and the tax agencies of U.S. states and possessions continue to aggressively pursue taxpayers and promoters involved in such abusive transactions.

6. Abusive Retirement Plans

The IRS continues to uncover abuses in retirement plan arrangements, including Roth Individual Retirement Arrangements (IRAs). The IRS is looking for transactions that taxpayers are using to avoid the limitations on contributions to Roth IRAs. Taxpayers should be wary of advisers who encourage them to shift appreciated assets into Roth IRAs or companies owned by their Roth IRAs at less than fair market value. In one variation of the scheme, a promoter has the taxpayer move a highly appreciated asset into a Roth IRA at cost value, which is below annual contribution limits even though the fair market value far exceeds the amount allowed.

7. Zero Wages

Filing a phony wage- or income-related information return to replace a legitimate information return has been used as an illegal method to lower the amount of taxes owed. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer also may submit a statement rebutting wages and taxes reported by a payer to the IRS. Sometimes fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any of the variations of this scheme.

8. False Claims for Refund and Requests for Abatement

This scam involves a request for abatement of previously assessed tax using Form 843, “Claim for Refund and Request for Abatement.” Many individuals who try this have not previously filed tax returns. The tax they are trying to have abated has been assessed by the IRS through the Substitute for Return Program. The filer uses Form 843 to list reasons for the request. Often, one of the reasons given is "Failed to properly compute and/or calculate Section 83-Property Transferred in Connection with Performance of Service."

9. Return Preparer Fraud

Dishonest tax return preparers can cause many problems for taxpayers who fall victim to their schemes. These scam artists make their money by skimming a portion of their clients’ refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Some preparers promote the filing of fraudulent claims for refunds on items such as fuel tax credits to recover taxes paid in prior years. Taxpayers should choose carefully when hiring a tax preparer, especially one who promises something that seems too good to be true.

10. Disguised Corporate Ownership

Some people are going as far as forming domestic shell corporations in certain states for the purpose of disguising the ownership of a business or financial activity. Once formed, these anonymous entities can be used to facilitate underreporting of income, non-filing of tax returns, engaging in listed transactions, money laundering, financial crimes and even terrorist financing. The IRS is working with state authorities to identify these entities and to bring the owners of these entities into compliance.

11. Misuse of Trusts

For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts. They promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. However, some trusts do not deliver the promised tax benefits. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering into a trust.

12. Abuse of Charitable Organizations and Deductions

The IRS continues to observe the misuse of tax-exempt organizations. Misuse includes arrangements to improperly shield income or assets from taxation, attempts by donors to maintain control over donated assets or income from donated property and overvaluation of contributed property. In addition, IRS examiners are seeing an upturn in instances where taxpayers try to disguise private tuition payments as contributions to charitable or religious organizations.

IRS Watches Scams That Fall Off the List

While the IRS has seen a decline in the occurrence of some of these scams, other problems, such as abuse of the American Indian Employment Credit and misuse of structured entity credits, continue to be areas of concern. The absence of a particular scheme from the Dirty Dozen should not be taken as an indication that the IRS is unaware of it or not taking steps to counter it.

How to Report Suspected Tax Fraud Activity

Suspected tax fraud can be reported to the IRS using IRS Form 3949-A, Information Referral. Form 3949-A is available for download from the IRS Web site at IRS.gov. The completed form or a letter detailing the alleged fraudulent activity should be addressed to the Internal Revenue Service, Fresno, CA 93888. The mailing should include specific information about who is being reported, the activity being reported, how the activity became known, when the alleged violation took place, the amount of money involved and any other information that might be helpful in an investigation. The person filing the report is not required to self-identify, although it is helpful to do so. The identity of the person filing the report can be kept confidential.

Whistleblowers also could provide allegations of fraud to the IRS and may be eligible for a reward by filing Form 211, Application for Award for Original Information, and following the procedures outlined in Notice 2008-4, Claims Submitted to the IRS Whistleblower Office under Section 7623.


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