Five Questions With: John Warren

John Warren is president of the Massachusetts Society of Enrolled Agents.
John Warren is president of the Massachusetts Society of Enrolled Agents.

John Warren is president of the Massachusetts Society of Enrolled Agents.
Warren talks with Providence Business News about why consumers should file income taxes early, consider using an enrolled agent and how to protect themselves from identity theft.

PBN: As we enter tax season, MASEA is urging consumers to file returns early. Why?
WARREN:
Taxpayers should file after they have all the necessary tax documents. Some taxpayers must wait until mid-March for investment or flow through entity tax documents, but most taxpayers have all that is necessary by late January or early February. Those who file at this time, and are getting refunds, will have access to the money up to two months sooner. Those who owe and file early have two extra months to prepare for paying the tax liability. The IRS adds penalties and interest to taxpayers who have unpaid balances after the filing deadline. Get started early and save money. R.I. Division of Taxation charges 18 percent interest and a penalty up to 25 percent on late paid taxes. Today we also need to address the possibility of identity theft. Filing early to prevent a false return using your Social Security number can avoid the burdens and delays of dealing with the IRS and identity theft. Filing early very slightly reduces the probability of being an ID theft victim; it’s no guarantee to safeguard against ID theft. File early to take control and better manage your finances.
PBN: Are there any benefits to filing electronically versus paper returns?
WARREN:
E-filing is quick, easy, convenient and secure. No ID theft has occurred as a result of an individual e-filing. An e-filed return is processed months sooner than a paper file return. E-file taxpayers can supplement applications for scholarships and home financing quicker than paper filers. The e-file process includes several edits and verifications that substantiate your filing. A taxpayer knows within 24 hours that an e-file return is accepted. Refunds are processed quicker. Those with unpaid balances can enter automatically into a guaranteed payment installment agreement with the IRS. An e-filed return with balance due can be paid by mailing in a check before the filing deadline or by an electronic funds withdrawal. E-filing gives the taxpayer convenience and confidence that the tax filing is complete.
PBN: Is there anything new about the filing process this year that consumers should be aware of?
WARREN:
Another year of no substantive tax reform, but far too many changes are in action than can be listed right here. Identify theft is changing the manner in which we all operate. Some states will delay refunds until after March 1. Some W2s will contain hashed PINs. Printed social security numbers will be replaced by account IDs or replaced with asterisks. The filing deadline for Rhode Island filers is April 18. For Massachusetts residents it’s April 19. Increased penalties exist for filing false and inaccurate tax reports. The 1099 income statements have penalties that will double. Mortgage interest statements will contain additional fields to better identify if the loan is a qualifying deduction. Rhode Island has a new refundable earned income credit for low-wage employee families. Massachusetts has a special gambling deduction for Massachusetts casino gambling losses.
PBN: Why should consumers consider using an enrolled agent to file rather than doing it themselves?
WARREN:
Many homeowners make their own home repairs. Sometimes a project is too much and a specialized tradesman is brought on to do the job. Taxpayers should call upon an enrolled agent when their tax filing is more complex than they understand or when an unusual situation arises. Divorce, retirement, death, marriage, starting a business, buying a home and cashing our stock options are some situations that should flag the need for extra help. In these cases the taxpayer knows enough to call for help.
But what about the stuff that you are not even aware of? An enrolled agent is not only allowed to represent the taxpayer before the IRS, but also is allowed to advise taxpayers. Branded as America’s Tax Experts, the enrolled agent can forecast problems before they occur. Tax preparation is about filing an accurate and timely return for this filing season, but also about preparing for next year’s filing. How does a taxpayer know if a 401(k) plan is a good idea? What can a taxpayer do to get a bigger refund or to owe less next year? How can someone who is unemployed and falling behind in credit card debt afford to have a tax return prepared professionally? The unemployment compensation and debt discharge are taxable items on next year’s return. An enrolled agent is the one who can help the taxpayer get ready for the next year. Taxpayers should reach out to their tax preparer during the summer and fall to exercise a tax plan. Using an enrolled agent is a way of tuning up so things will run smoothly.
PBN: In recent years, there have been some issues with identity theft during tax season, how can consumers protect themselves from such danger?
WARREN:
There are some things that are beyond the individual consumer’s control, such as the data break-ins at T.J. Maxx, Home Depot, Target Stores and Anthem Health. Just the same, good data habits are as necessary today as are good health practices. We wash our hands, eat healthy foods and get plenty of rest to stay well. Today we also need to shred sensitive materials, change log-on passwords every three months, review credit card and bank statements regularly, review your credit report and consider ID theft protection services and even something called “credit freezing.” Consumers have to be on the alert about being led down dark alleys. We are careful about being in the mall parking [area] alone, about which neighborhoods to visit and about walking the streets at night. Today we need to sense danger before it happens, be suspicious about hostile and aggressive phone callers, about emails from people you don’t know, about hyperlinks embedded in emails, about clearing your passwords and login accounts. Scams and phishing are the techniques of cyberthieves. As with muggings and home break-ins, report criminal cyber activities to the authorities. The Treasury Inspector General for Tax Administration at TIGTA.gov wants to track criminals who impersonate government officials. Always remember to protect your personal information. Do not routinely carry your Social Security card and do not overshare personal information on social media. Personal information about new cars and details about your children will help identity thieves pose as you. Shred sensitive documents before putting them in the trash. Many people feel safer having a licensed professional, such as an enrolled agent, prepare their returns. Enrolled agents (also known as “EAs”) receive their licenses from the IRS and are required to undergo a background check. They abide by a code of ethics and earn annual continuing education. You can find an enrolled agent in good standing on the directory of the National Association of Enrolled Agents: eatax.org.

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