Taxpayer Trust and How Do You Earn That?

By Director Gia Hoa Ryan, Friendship Foundation LITC

For many years I have worked with taxpayers who come from families that have immigrated to America from Southeast Asia. Many of these have Vietnamese backgrounds.

In their homelands they had difficulty trusting their government. Some of them came from countries where there were repressive regimes. Others came from regions where various strong families and royalty dominated. Often it did not matter who was in control. All government officials seemed to be motivated by gaining money for themselves and their families often by corrupt and illegal means.

Usually in their home countries there were various tax systems which might include taxes on a family’s income as well as on purchases and assets. The goal of the ordinary people was to try to hide and safeguard their money as much as possible. Any means were used, including some that were illegal.

When these families come to America, unfortunately they often retain their old views and attitudes toward government and taxing systems. They may hide income by asking to be “paid in cash under the table” and then conveniently forgetting to report this to IRS. There are other ways to hide assets. Usually these families distrust banks because of bad experiences in their first home lands where banks would attract deposits and then go broke leaving depositors with nothing. To escape this and also avoid creating paper trails IRS and other collection agencies might track, a good number will keep fairly large sums of money hidden away in their homes. They want the assurance that they can control their money and get the money quickly with much hassle.

In the United States at tax filing time, these ESL families often use paid tax preparers, sometimes people from their own local community. The paid nationally-known tax preparers often cannot understand too much of what these ESL people say. So the filing personnel hurriedly fill out the forms and often see whether these families can qualify for EITC. This ups the fees the paid preparers can collect. They may even ask questions in such ways as to qualify them for the EITC.

The local community tax preparers are worse in various ways, even though they come from the community. Often they will just file for the Federal tax and the State tax, while overlooking the city tax requirements.

The city amounts are usually fairly small. The ESL families often move around a lot. So the involved city may not have the resources “to hunt them down.” Even if caught, the ESL families can later claim they knew nothing about such tax requirements. The community tax preparers will hide behind statements such as, “I told them to file and they said they would,” or “they did not give me the right information.”

This is some of the background information about ESL and low-income tax filers.

So what should our LITC do?

First, we cannot excuse and go along with such illegal schemes. We always emphasize that everybody must pay their fair share of the taxes. We also urge ESL families to think about whether they may want to sponsor another family member from another country. If they cannot show financial responsibility, this will not be possible. We also back this up with stories about how people have been prosecuted for tax cheating.

Second, we are always here for the ESL families. Often the paid tax preparers are only open during the four months of the Tax Season. Their personnel often change. But we have been here in the same location fourteen years and plan to be here another fourteen. So ESL families can always consult with us for our probono services.

Third, we do advise families We help them understand not only Federal Tax requirements. But also the State and city tax requirements. The latter can be multiple because each city has its own tax laws and our ESL families may work in several cities during the year. We had one young taxpayer who worked in five different cities and each had its own law. We were able to advise her on her obligations and how to meet these.

Fourth, we are here to help ESL and low income families if they encounter problems with their expected IRS tax refund and receive a dreaded IRS letter. Many times these problems occur months after filing and at times when the paid tax preparers have shuttered their offices until next tax season.

Fifth, besides tax information, referrals, and advice, we help families generally with financial literacy. This can be on questions relating to housing and mortgages. We have helped families avoid foreclosure proceedings and we have helped others save their homes even after foreclosure cases have been filed against them. We have provided assistance and classes on issues of contracts, credit unions, credit cards, college loans and scholarships, and even bankruptcy.

All of this builds trust in the ESL taxpayers. They know with confidence that when they come to us, we provide them with honest, straight forward, and helpful advice and counseling.

That is how our LITC has thrived and how the members of our various ESL communities have and will continue to benefit from our services.