Rule Changes Render A Kinder, Gentler Irs

The Internal Revenue Service strikes fear and loathing in the hearts of many taxpayers, but changes for this year should give some of us a sense of relief instead.

One major change relates to refund-anticipation loans. This method of receiving refunds allowed taxpayers to go through a lender to get a loan in the amount of their expected tax return, before getting the check from the IRS.

Last year, the IRS delayed millions of notices used to alert lenders that the anticipated loan amount indicated by the taxpayer was correct and the refund would be coming.

The IRS cited the loans as an inducement to fraud, particularly under the earned income tax credit program for low-income workers, said William Williams, assistant to the president for H&R Block.

This year the IRS relaxed its rules. People who are pre-approved for loans through lenders will be able to get up to $3,500 in a refund-anticipation loan. That includes any money they would get through the earned income credit.

That’s good news for the people who need their refunds immediately, said Nicholas Drobot, assistant district manager for H&R Block.

“This means the people who need the money the most right away - those with earned income credit - don’t have to wait,” Drobot said.

The IRS also is allowing people to file their returns using their final wage statement or pay stub if they have not received their W-2 forms from their employers on time, Williams said. The deadline to receive W-2 and 1099 forms is January 31 in most areas, but the deadline was moved back two weeks in some Washington and Idaho counties because of flooding and other natural disasters.

Taxpayers will still be allowed to file electronically using their wages statement instead of their W-2 form, Williams added.

Prudential claim forms ready

Insurance Commissioner Deborah Senn said Friday Prudential Insurance Co. of America policyholders will be able to file claims against Prudential beginning Monday under terms of a multimillion-dollar settlement with Washington state.

The consent order, announced in early November, followed a multistate investigation into misrepresentation and misleading sales tactics involved in the sale of life insurance.

The order includes restitution for up to 100,000 Washington policyholders, Senn said.

“We will have a toll-free hotline (800-627-7938) staffed by knowledgeable people in Olympia beginning at 9 a.m. on Monday,” she said. “The claims process will be confusing for many consumers, but it should not be that complicated once people understand how to go about filing.”

A letter alerting Prudential policyholders in Washington about their options was mailed this week. Another with more information about claim-filing is planned.

The remediation plan gives policyholders three options: Basic Claim Relief, in which policy-holders do not have to make a claim of direct harm; Alternative Dispute Resolution, in which policyholders will file a specific claim outlining damages that occurred; or Decline to Participate, in which case they need do nothing.

All claims will be weighed by an impartial arbiter. Policyholders may appeal the outcome to an impartial second reviewer. Relief will range from enhanced policy values and premium-free periods to interest-free loans.