The South Carolina Department of Revenue (SCDOR) is currently investigating a tax refund scam involving numerous individuals in the Mt. Pleasant and Charleston area, and another arrest was made this morning.

Tameka Coakley was arrested today for one count of assisting in the preparation of a false tax return and one count of forgery. If convicted of the charges, Coakley could face penalties of up to $500 in fines and/or 10 years in prison.

Upon reviewing Coakley’s 2008 income tax returns, investigators from SCDOR determined Coakley’s state tax return was filed by a tax preparer using fraudulent W2 forms provided by Coakley from her employer. The investigation revealed that Coakley worked for this employer in 2008, but she manipulated the wages and withholding information and thus received a SC income tax refund of $685.

Tameka Coakley is the fourth individual thus far to be arrested by SCDOR for tax fraud surrounding this tax refund scam in the Charleston area.

Columbia, SC — Less than a month away in South Carolina is the annual Sales Tax Holiday – the state’s popular three-day sales and use tax break on traditional back-to-school purchases.

The 13^th annual Sales Tax Holiday, which was implemented in 2000, will begin Friday, August 3 at 12:01 a.m. and tax-exempt purchases can be made through Sunday, August 5 at midnight. While providing taxpayers with an exemption on the 6% statewide sales tax as well as any applicable local taxes, the tax-free weekend also benefits in-state businesses by urging taxpayers to do their back-to-school shopping in South Carolina.

During this time, taxes will not be imposed on clothing, shoes, school supplies, book bags, computers, printers, bedspreads and linens, and more. Nonexempt items during the weekend include the sales of jewelry, cosmetics, eyewear, furniture, or items placed on layaway. Portable devices whose function is primarily used for telephone calls, listening or downloading music, watching videos, or reading books, are not exempt during the tax-free weekend. However, with the growing popularity of computer tablets, portable devices that have computing functions and allow users to access multiple software applications are considered computers and are therefore tax-exempt, provided they do not allow users to make telephone calls. More information on the exemption of computer tablets can be found at www.sctax.org.

The popularity of the tax-free weekend has made it the third busiest shopping period of the year, surpassed only by the weekends after Thanksgiving and before Christmas, as South Carolina shoppers save approximately $3 million during the tax-free weekend.

For more information about this year’s Sales Tax Holiday, including an example list of exempt and nonexempt items as well as a listing of frequently asked questions, visit the SC Department of Revenue website, www.sctax.org, under the “What’s New” section. 

If you need assistance planning your tax free weekend shopping please feel free to call Tax On Wheels, LLC at 803 732-4288.

 

During the summer many parents may be planning the time between school years for their children while they work or look for work. The IRS wants to remind taxpayers that are considering their summer agenda to keep in mind a tax credit that can help them offset some day camp expenses.

The Child and Dependent Care Tax Credit is available for expenses incurred during the summer and throughout the rest of the year. Here are six facts the IRS wants taxpayers to know about the credit:

1. Children must be under age 13 in order to qualify.

2. Taxpayers may qualify for the credit, whether the childcare provider is a sitter at home or a daycare facility outside the home.

3. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

4. The credit can be up to 35 percent of qualifying expenses, depending on income.

5. Expenses for overnight camps or summer school/tutoring do not qualify.

6. Save receipts and paperwork as a reminder when filing your 2012 tax return. Remember to note the Employee Identification Number (EIN) of the camp as well as its location and the dates attended.

Remember, many states offer an similar credit on your state return.  South Carolina offers a 7% credit for every dollar that qualifies for the federal dependent care credit.

Please contact Tax On Wheels, LLC at 803 732-4288 if you need assistance with this or any other credit.

During the individual income tax filing season, there is often an increase in tax-related scams.

The SC Department of Revenue is reminding taxpayers to be aware of fraudulent phone calls, text messages, emails or other forms of communication that may ask for personal identifying information such as birth date, social security numbers, address, mother’s maiden name, driver’s license number or other private information.

The SC Department of Revenue typically contacts taxpayers via standard mail and then a phone call for follow up when requested. Occasionally communication will be made by email if an employee is responding to a taxpayer’s inquiry. If a taxpayer contacts DOR, an employee may then ask for personal information in order to access their files. 

Taxpayers should be cautious during this tax season of persons contacting them to offer tax advice or help with filing their taxes.

Individuals with concerns can contact the SC Department of Revenue directly at (803) 898-5000 or visit www.sctax.org.

The 2012 tax season has begun and the South Carolina Department of Revenue (SCDOR) is urging taxpayers to file their income tax returns electronically.

South Carolina is a national leader in the percentage of its taxpayers that file electronically. Of the 2.1 million returns processed in 2011, 1,692,965 were filed electronically with taxpayers receiving an average refund of $837.

Electronic filers may receive a refund in as little as 10 days, as compared to those who file a paper return, which could take an average of three weeks to receive a refund.

In South Carolina, taxpayers can file their state income tax return electronically by purchasing and using commercial tax preparation software, having a professional tax preparer file for them, or using Free File through SCDOR’s website.

Qualified SC taxpayers can take advantage of free tax preparation services available through Free File in order to electronically prepare and file their state and federal income tax returns simultaneously for free. Since its inception in 2003, the Free File Alliance has offered 70 percent of taxpayers free access to leading commercial tax preparation software. While users benefit from Free File’s automatic check for accuracy, the program is also user-friendly, completely paperless, safe and secure. Taxpayers with an income of $57,000 or less can visit www.sctax.org and click on the Free File icon to e-file their return with one of the six vendors offered.

New in 2012, taxpayers receiving a state income tax refund will be mailed a prepaid debit card containing the amount of their refund, in place of a paper check. In addition, taxpayers have the option to choose direct deposit or to receive a paper check if they do not wish to receive a debit card. Direct deposit is the refund method preferred by SCDOR.

To learn more about filing your taxes electronically, or to check on the status of your refund, visit www.sctax.org or call the individual income tax section of SCDOR at (803) 898-5709.

You may call Tax On Wheels, LLC at 803 732-4288 if you need assistance with state or federal income tax issues.

We previously made you aware of the South Carolina Department of Revenue’s emphasis on collection of use tax in this January 15, 2012 post.  The SCDOR has now issued the following announcement concerning Use Taxes and filing your individual income tax return.

Use tax informational pages available online

During individual income tax season, South Carolina taxpayers are reminded to report and remit use tax on all purchases in which no sales tax has been paid.

Use tax should be remitted on goods purchased from out-of-state vendors or from online retailers for consumption or use in South Carolina.

Sales tax is imposed on all retail sales within South Carolina and in-state retailers are required to remit the sales tax to the SC Department of Revenue. The use tax is imposed on out-of-state purchases of goods for use, consumption or storage in South Carolina. If the out-of-state retailer does not collect the tax to submit to South Carolina, the taxpayer should then report and remit use tax on those items. If the taxpayer purchases goods in another state for use in South Carolina, the taxpayer is allowed a credit for the other state’s tax and would only owe the difference.

How do I pay use tax?

When paying use tax, taxpayers are required to pay the state tax rate of 6% as well as any applicable local option taxes, which vary by county.

Use tax can be remitted in one of three ways: taxpayers can report use tax on their Individual Income Tax Return Form SC 1040; or use tax can be remitted throughout the year via DOR-ePay, an electronic payment system available online, or via a UT-3 Form, submitted to DOR.

Why is the use tax important?

Use tax is important to the state of South Carolina as it protects local businesses from an economic disadvantage with out of state retailers. The state’s collections from the sales and use tax fund South Carolina’s public school system.

To learn more about South Carolina’s sales and use tax, and to submit use tax on your purchases, visit www.sctax.org and click on the ‘Use Tax’ icon.

National Association of Tax Professionals, Appleton, WI – Milton Cooley of Irmo, South Carolina celebrates 20 years of professional affiliation with the National Association of Tax Professionals (NATP), a nonprofit professional association founded in 1979, and committed to excellence in taxation. NATP members dedicate themselves to continued education and a high code of ethics and professional conduct.  Cooley is principle owner of Tax On Wheels, LLC, a local tax firm that has been offering in home tax preparation for individuals and small businesses for over 20 years.  For additional information about Tax On Wheels, LLC please visit www.taxonwheels.com .

Members of the National Association of Tax Professionals (NATP) work at offices that assist over 11 million taxpayers with tax preparation and planning. The average NATP member has been in the tax business for over 20 years and holds a tax/financial designation and/or a college degree. NATP has more than 20,000 members nationwide. Members include individual tax preparers, enrolled agents, certified public accountants, accountants, attorneys and financial planners. As a nonprofit professional association, NATP serves professionals working in all areas of tax practice through professional tax education, tax research and tax office supplies. The national headquarters, located in Appleton, WI, employs over 50 staff members. Learn more at www.natptax.com.

The South Carolina Department of Revenue (SCDOR) will honor the April 17^th individual income tax filing deadline set by the Internal Revenue Service.

Since April 15, 2012 falls on a Sunday, and Emancipation Day in Washington, DC (a DC-only holiday) is observed on Monday, April 16^th, the official filing deadline will move to the following business day which is Tuesday, April 17^th.

SCDOR will honor the federal due date but will not change forms to reflect the April 17^th deadline. This deadline applies to any income tax return or payment normally due on April 15^th; it also applies to the deadline for requesting a tax-filing extension.

South Carolina taxpayers who file and pay electronically have until May 1, 2012 to do so without penalty or interest being assessed. The May 1^st deadline does not apply to federal returns or to SC taxpayers who file paper returns.

Many states, including South Carolina, seem to be searching for ways to increase revenues.  One way to do that is to become more aggressive in enforcing the often ignored Use Tax.

A use tax is the government’s way of saying you still have to pay sales taxes even if you bought goods out of state.  If you personally ventured across the state line and bought goods in another state and paid that state’s sales taxes that is generally the end of the matter.  You may owe a use tax but you are generally given credit for any sales taxes paid to the other state which reduces your Use Tax liability.  However, if you purchased goods online or over the telephone you most likely did not pay any sales tax on the purchase and the Use Tax is now a factor in preparing your state tax return.

The South Carolina Use Tax has been around since the early fifties.  But just like highway speed limits and jay walking laws, this law was frequently ignored, by both the tax payers and their governments.  The line for declaring Use Tax liability has been on the Form SC1040 for many years now.  In previous years everyone was pretty much free to ignore this line item if they so chose.  The assumption was that if you put nothing on that line then you had no use tax liability.  This all seems to be changing now.

This year each South Carolina taxpayer will have to affirmatively declare a use tax liability under penalty of perjury as indicated by their signature on the tax return.  .  If you bought goods that are subject to the use tax you will have to declare that amount and pay the corresponding use tax with your income tax return.  If you did all of your shopping locally and do not owe Use Tax then you will still need to affirmatively declare that you had a zero tax liability.

So what does this mean for you?  It means that you now need to keep track of all those out of state purchases, whether online or otherwise, and report those purchases on your state tax return.  Your tax preparer must ask you about your purchases subject to Use Tax.  You must put an entry on the form.  If the number is zero then so be it.  You will owe nothing.  But if you thought you saved a few pennies on birthday presents for the grandkids by shopping out of state to avoid paying sales tax on those purchases then you must report this on your state tax return and pay the appropriate percentage.  This will either reduce your refund or increase your balance due.

If you have questions about Sales and Use Tax issues please give us a call at 803 732-4288

After posting our apparent scoop about the South Carolina state income tax refund prepaid Visa debit card program yesterday we received the following:

Columbia, SC — The South Carolina Department of Revenue (SCDOR) today announced that taxpayers will soon be offered a new method for receiving their individual income tax refunds.

For the 2012 individual income tax filing season, the SCDOR, working with Bank of America Merrill Lynch and Visa^®, will provide taxpayers with an income tax refund prepaid debit card in place of a paper check. The SCDOR Income Tax Refund Prepaid Debit Card is intended to eventually replace the printing and mailing of paper checks, saving the state of South Carolina significant costs in tax dollars and processing time.

South Carolina taxpayers will still have the option to designate direct deposit or to receive a paper check on their income tax return if they do not prefer a debit card.

“Through the SCDOR Income Tax Refund Prepaid Debit Card and direct deposit options, SCDOR aims to expedite the process in which individuals receive their income tax refunds. It is our goal to make this method as cost-effective and easy to use as possible for the South Carolina taxpayers,” stated Director Jim Etter.

With the SCDOR Income Tax Refund Prepaid Debit Card, the refund is delivered electronically to a unique prepaid debit card account created for the taxpayer. Card recipients may transfer the refund amount into their personal bank account just as they would deposit a paper check. The card is a particularly convenient option for taxpayers who do not have a traditional bank account.

Cardholders can conduct a variety of transactions without fees at Bank of America ATMs, online, over the phone and everywhere Visa debit cards are accepted. Customer service is available from Bank of America 24 hours a day, seven days a week. If a card is lost or stolen, it will be replaced immediately at no charge, and cardholders are protected against any unauthorized or fraudulent charges.