From Reuters.com:
As a deep recession strips Americans of their jobs, homes and investments, the 2009 U.S. tax season promises to see a large uptick in first-time delinquent income taxpayers.
"Our calls are up 280 percent," said Richard Boggs, founder and chief executive of Los Angeles-based Nationwide Tax Relief, a firm that helps delinquent taxpayers resolve tax issues.
"We've seen a huge rise in what we call the rookie delinquent taxpayer," he said. "They are incredibly scared, and they have no idea what's going to happen to them because, God bless them, they've never owed before."
As the weak economy puts job security and a steady flow of income on a slippery slope, many are wary of the U.S. tax man, tax consultants say.
With household balance sheets under pressure, more U.S. households are having trouble keeping up with their day-to-day bills and struggling to pay their taxes.
"Folks are not paying their taxes because they are spending it on necessary living expenses," said Kristin Lavieri, an accountant with Weinstein & Anastasio, PC in Hamden, Connecticut.
She added that more of the self-employed, who are required to pay taxes each quarter, are likely to end up with back taxes. "When there is not enough money for general operating expenses, there most definitely isn't going to be enough for quarterly estimates," Lavieri said.
Among those not self-employed, many also have to make tough decisions that could carry long-term financial consequences.
Many withdrew funds from 401k and IRA retirement savings accounts before the permitted time, unaware of the punitive taxes and penalties this would generate, said Larry Walker Jr., president of the financial and tax services firm 4-Serenity Inc in Snellville, Georgia.
Withdrawals from a retirement account before reaching the age of 59.5 are considered taxable income and generally incur an additional tax of 10 percent of the amount.
Other taxpayers did not have enough tax withheld from paychecks. As a result, they now owe taxes or will not receive the amount of refund they usually do, Walker said.
