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Double-claiming tax payers plague tax office, as first refunds are released

The first tax refunds for tax year 2012 were released this week covering those who have filed up to Jan. 28, according to Melvin Joseph, the Tax Office manager, who pointed out that they continue to be faced with recurring problems, such as people double-claiming children.


Tax Office released on Tuesday refunds totaling $150,092 for the the first two runs of refunds for 150 tax payers, said Joseph, who added that the overall total covers $43,956 in local and $106,136 in the Additional Child Tax Credit (ACTC) — which is funded by the U.S. Internal Revenue Service (IRS).


“These two runs are mainly for workers from the private sector who filed early, after receiving their W-2 forms in advance of the Jan. 31 deadline for employers to release the W-2 form,” said Joseph in a phone interview yesterday.


He said the Tax Office was preparing to send yesterday to the IRS, another list of local tax payers who qualified for the ACTC, and the next round of tax refund checks is expected to be issued once the IRS contribution comes sometime later next week or soon thereafter.


When asked about recurring problems with tax filers, faced again by the Tax Office, Joseph said, “we are always encountering taxpayers double- claiming children belonging to others under the ACTC. We are also encountering tax payers claiming children despite the fact they have have no blood relationship to the child.”


Because of this long standing problem, Joseph said the Tax Office is checking and verifying all people claiming the ACTC to make sure that the children — under the age of 17 — belong to them, and those children are not being claimed by others.


Another recurring problem, says Joseph, is that of tax payers wanting their tax fund as soon as possible.


“Tax returns are processed in the order they are received, and we don’t do expedited tax refund checks. And we will continue to receive these requests, but — again — we don’t expedite issuance of a tax refund,” said Joseph. “Again, it’s first come, first serve.”


And finally, “we are again hearing of more and more local tax payers filing their local taxes in the U.S. in order to get a larger tax refund, and this is illegal and against federal laws,” said Joseph, who stressed that local taxes are to be filed locally and the IRS continues to monitor W-2 forms out of American Samoa being processed in the U.S.


The IRS launched an investigation more than four years ago into local residents who filed in the U.S. to claim the Earned Income Tax Credit (EITC) — a credit for which residents of American Samoa and other U.S. territories do not qualify.


“You cannot file in the United States to claim other federal tax refunds,” said Joseph, who pointed out that some residents appear to think that, just because no federal charges have been filed against others who filed taxes off-island, it's also safe for them to do the same thing, although it is wrong. 


“While the arm of justice may move slowly, it will get to those who violate federal laws,” said Joseph.


Local residents began filing taxes in the U.S. after seeing others getting large refunds — between $1,500 and $3,000. Residents would use home addresses of their family members or friends in the U.S in order to claim the federal refund.


Last year, the federal court in Guam sentenced a woman there for preparing and filing taxes of Guam residents to illegally claim the EITC. Taxpayers who got money under the EITC have since been ordered to repay the money, with interest and penalty.


In 2010, Bank of Hawai’i fired four employees in American Samoa for "inappropriate" tax filings with the U.S. Internal Revenue Service. At the time, BoH District Manager Hobbs Lowson said the filings violated the bank's standards for employment, but he didn't elaborate.