To declare taxes In the United States it is quite a challenge. Every year, taxpayers are faced with a convoluted, inefficient and confusing tax filing system. These difficulties greatly affect Latino taxpayers, particularly those from low-income, non-English speaking, immigrant families.
As people of all backgrounds face the risk of being targeted by the predatory tax filing industry, Latinos are particularly susceptible to falling victim to unqualified service providers who frequently engage in fraudulent practices and take advantage of our community..
Improving the US tax system is not just a matter of modernizing government systems: it is a matter of justice.
That’s why it’s so exciting that millions of taxpayers across the country, including those in Florida – the state where I live – now have an easy, free and secure option through the new pilot program Direct File del IRS.
The tool, which is being tested in 12 states, will allow taxpayers with simple returns to file them online, with the IRS, for free, directly and securely.
Available in both English and Spanish, users with an SSN (social security number) or ITIN (individual taxpayer number) can visit the Direct File website to see if they qualify for this year’s pilot program. The option is a substantial change for millions of Latino families who have been intentionally exploited by the tax preparation industry.
With tax filing season in full swing, Latinos across the country are turning to for-profit tax preparers to help them navigate what has become an increasingly complicated and bureaucratic system. Some may resort to notarieswho are often fraudulent tax preparers who take advantage of our communities who come from countries where a notary is considered a qualified and respected professional, equipped with the necessary credentials to file taxes on behalf of immigrants.
However, in the United States these individuals often operate as financial predators, exploiting vulnerabilities within our communities, charging exorbitant fees, and putting vulnerable taxpayers in harm’s way with the IRS.
Other Latino taxpayers will turn to online services, many of which have a documented history of take advantage of your customers and of falsely market your services as free. Others will rely on unregulated tax preparation companies, which exploit low-income filers and typically commit deliberate or unintentional errorsin tax returns.
This has unfortunate consequences for users of such companies, such as losing money owed to them by the IRS, or exploiting vulnerabilities that exist within Black and Latinx communities. Recently, both TurboTax and H&R Block have found themselves in hot water with the FTC (Federal Trade Commission) for deceptively marketing their products, making them appear to be free when they are not, and coercing their customers into purchasing tax products that are not. they need.
The IRS National Taxpayer Advocate has described the current state of the industry as something similar to “Old West”pointing out the level of risk of abuse since tax preparation companies only care about one thing: their profits.
It is estimated that 87 million taxpayers lose around $13 billion a year of their returns due to these companies’ unnecessary fees and often because these filers have no other option. We know that tax preparation companies take advantage of people with precarious financial situations. Many unregulated tax preparation companies They are especially directed at low-income, majority black and Latino communities, where tax benefit claims (based on individual income) are highestand therefore they know that they can charge higher fees and make false promises to people who experience financial insecurity.
These tax scams take money out of the hands of our communities through hidden fees and reduce the access of these taxpayers to important poverty reduction programs such as tax benefits based on individual income or the tax benefit for families with children.
It is estimated that one in five families Those who qualify for those benefits do not receive them, because it is too difficult or expensive to file taxes. Likewise, in 2021, Latino and Black families who qualified for the expanded tax benefit for having children were among the less likely to receive it.
Especially for Latinos and single mothers, dealing with numerous responsibilities and financial stresses at the same time can make it more difficult for them to access these tax benefits. And tax scams only exacerbate existing disparities in access to those basic benefits.
We deserve better. As an organizer and leader of Florida Rising—a statewide independent political organization working to advance racial equity and expand democracy—I speak every day with working-class taxpayers, many of them They are from the communities targeted by these shady tax preparation companies. These families want to pay their fair share of taxes and contribute to their communities.
They deserve, therefore, a tax system that allows them to receive the benefits they earn without paying outrageous fees to private companies. If lawmakers want a tax system that works for everyone, Direct File must be part of the solution.
Andrea Cristina Mercado is the Executive Director of Florida Rising
