Ken Milani, professor of accountancy at the University of Notre Dame and faculty coordinator of the Tax Assistance Program, is this week’s Newsmaker. p. Q. When did the Tax Assistance Program start and why?p. A. The Tax Assistance Program (TAP) started in 1972. Its purpose is to provide free income tax return preparation service to low-income individuals on a regularly scheduled basis at locations that are convenient. Last year more than 2,500 federal and state of Indiana tax returns were prepared by TAP personnel.p. Q. How do the University of Notre Dame and Saint Mary’s College students get involved in the Tax Assistance Program?p. A. The students find out about the TAP from a variety of sources, including faculty at Notre Dame and Saint Mary’s and students who participated in TAP in the past. About 80 to 90 students have elected to participate in the effort during the past few years. That enables TAP to operate throughout the Michiana area. If readers are interested in more information about the locations, they can call 631-7863 for more details.p. Q. How knowledgeable are taxpayers in general about the federal and state income tax laws?p. A. Since taxpayers tackle the “taxes task” only once a year, they have a fairly good general knowledge but their specific understanding is weak since they are not up to date on the latest changes. That’s where the TAP participants (including the CPAs who help us) provide a real benefit to the taxpayers. All of the students have completed a one-semester course in Federal Taxation. In addition, they also receive an additional 10-12 hours of training that focuses on specific situations they are likely to encounter when preparing tax returns. The added training occurs during the first four weeks of the second semester.p. Q. What is the greatest misconception about the income tax laws?p. A. Taxpayers are concerned about owing money to the federal or state government at filing time. In fact, about 75 percent of all taxpayers in the country receive a refund from the federal government as a result of a variety of credits that trim the tax bill considerably. Some of the credits that are most helpful include the earned income credit, the child care credit, the dependent care credit and the education credits.p. Q. What would you change about the U.S. tax system?p. A. It really boils down to a need to simplify the system. That won’t be an easy thing to do since one person’s “loophole” is another person’s “well-deserved tax break.” We are a complex people. As long as the tax laws attempt to respond to our individual differences, a certain degree of complexity will come with the territory. For instance, the flat-rate tax had a very strong appeal until taxpayers discovered that a pure flat-rate system did not allow deductions for such items as interest on a home mortgage, real estate taxes and charitable deductions. Are those deductions “loopholes” or “well-deserved tax breaks?” The response to that is determined at an individual level based on how people have decided to live their lives and spend their money.
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