It's tax time again! For small business owners, that can mean Schedule Cs and SEs, bagfuls of receipts and so many headaches that many find it worthwhile to pay an accountant and damn the expense. But for people who earn wages and get W-2s, tax time often means not only fat refunds but such simple tax returns they can easily file themselves, for free and online.
Which millions of them don't realize. Confusion about taxes creates a beautiful fat opportunity for operations that feed off the poor and ignorant. In 2015, The Planet wrote its 2015 tax-time classic, I Saw the Statue of Liberty Weep (While Smoking a Marlboro) about one of them. Last year, The Planet threatened to run it each season, like A Christmas Carol at Christmas. Accordingly, here it is below. But let's precede this year's version with a quick rundown of all the tax services available in the Dade area this year.
First of all, Liberty's still at it. The Planet got this snap of its diadem-and-tablecloth "waver" luring customers with promises of $50 for walking in one cold day in January. Since then, The Planet has noticed that Lady L's been less in evidence this winter than usual, but The Planet confirmed by phone this afternoon that the office is still up and going.
Liberty's practices are detailed in the essay below, but the one The Planet found shadiest is its lack of a fee schedule. In typical cases, The Planet found, customers left the Liberty office without any idea how much they had paid, because Liberty not only deducted its fees from customers' refunds (which it produced up front for another $40 or $50 fee), it also sent them home without a copy of their tax return. Without that, they had no way of knowing how much their refund would have been had they not allowed Liberty its nice big cut of the government's largesse. Well, read the piece below.
Next: These past few years, The Planet had noticed a big green turtle outside Fast Turtle Tax on Main Street just north of the Trenton town square, and wondered if it was the same sort of operation. Answer: No, it is a smaller and more local operation. Also, it's not the Turtle anymore. The Trenton Fast Turtle was bought out recently by Tax Masters 101, a small chain with four other locations in the northwest Georgia area. The local office is run by Jessica Castillo, who said she did her training at Liberty Tax.
But she said that Tax Masters did have a more upfront fee schedule than Liberty: It offers basic tax returns for wage earners with "no crazy stuff"--just W-2 income--for $50, with the additional caveat that the company will match anybody else's price. She said that the company of course charges extra fees for the extra forms and schedules required with more complicated tax situations, and that she had just completed a business return for $250.
The sign out front advertised "Cash for W2s". Ms. Castillo said that was in reference to an earlier promotion, but she said the company like Liberty does offer an advance refund, for which it charges a fee around $40. Tax Master also gives cash rewards for referrals. But Ms. Castillo assured The Planet that Tax Masters does anyway send customers home with a copy of their tax return.
The Planet next called H&R Block, which has an office in the strip mall behind CVS on 136 West. The employee who answered the phone there said charges vary with tax situations. But H&R is a national firm and advertises a free online filing service for those with W-2 income only; $29.99 for online W-2 income-plus-personal deduction (Schedule A); and a $59.99 starting fee for in-office document drop-off services.
As far as advance refunds, the Trenton H&R Block does offer that through its "Emerald Card" service, said the employee, for a cost of $39.95. The Planet looked up Emerald Cards and found it was a complete and complex financial service the company offers nationally. It works like a debit or prepaid credit card, with a wide array of fees depending on what the customer does with it. Block customers can use an Emerald Card to pay bills online for 95 cents a pop, withdraw money from ATMs for $3 a withdrawal, get money over the counter from a financial institution for $35, or check their balance for $1.50. They can also borrow on it and pay on it like a personal line of credit. The Planet has not analyzed and will not pronounce on whether this is a good deal or a bad deal for users except to repeat, incredulously: Check their balance for $1.50?
That's a roundup of the local vendors that came up with a Google search of tax services in the Dade area. The Planet realizes there are many independent preparers and services and apologizes for skipping any.
As far as free services, taxpayers can still go to IRS.gov and use the Free File function if their adjusted gross income is less than $66,000. Refunds are deposited into their checking accounts in as little as 10 days, and those who have to pay can do that simply online as well.
Now, for those who made more than $66,000, options look a bit trickier this year. There's a function now called Fillable Forms that does not appear anywhere near as simple as Free File. The government info page directs those needing help to VITA volunteers. The Planet is sad to report that there won't be any of those at the Dade Public Library this year.
Now. Here in all its glory is The Planet's Liberty Tax piece. (Editorial cartoon by Jerry Wallace.)
I Saw The Statue of Liberty Weep (While Smoking a Marlboro): My Brilliant Career as a Liberty Tax Preparer, And What It Means to America
I write this account of my experience as a prospective Liberty Tax tax preparer not because Liberty Tax is a sleazy operation that preys unconscionably on the poor and ignorant (though it is); nor because I feel wounded personally by its evil ways (though I do). No, Gentle Reader, I write this in an attempt to point out a profundity about the larger economy. Patience!
Liberty Tax first entered my consciousness in late September. I’d been looking for a job since Labor Day without a single nibble and was getting that sick Future-Bag-Lady-of-America feeling in the pit of my stomach. Meanwhile, minimalist signs with a phone number and the words HIRING NOW had cropped up all over town. I thought it was a scam but I was desperate and I called.
Turned out the signs were from Liberty Tax, recruiting tax preparers for the 2015 season. I’d been a tax preparer in an earlier life, during another hungry period. So I felt a ray of hope and agreed to come to an open house the next day at the local office, which was in a storefront next to my regular grocery store.
The open house cheered me further: The upside of becoming a middle-aged white lady, with chin hairs and back fat, was that I was the only one there who could be imagined preparing income tax returns. The others were young men in shorts, including one covered almost completely in tattoos. A girl began to feel positively employable!
The manager – cute, young, female, with sparkly brown eyes, so let’s call her Twinkle – asked us all what was the craziest thing we’d ever done. Tats said, “That would be the time I stole the school bus.”
Twinkle told us all about Liberty Tax: The founder, John Hewitt, had made the connection between computers, the internet and income tax preparation, and had earned himself megabucks. Now he sold franchises and all over the USA people who owned Liberty Tax offices were also making megabucks. Twinkle told us the guy who owned this office and several in the surrounding area had made megabucks, too, becoming a millionaire before he was 30. Twinkle was just the manager this season but she hoped to buy the office and make megabucks herself.
We tax preparers would make $8 an hour, she told us.
Plus commission! Twinkle explained: Attending Liberty’s “Free Tax School” and passing a certification test would make us eligible for hiring as preparers in January. We would be paid our $8 a hour and then at the end of the tax season we would get our big commission check. Plus, she said, we would be invited to a beach party in Virginia Beach, where Liberty had its corporate headquarters.
Twinkle said Liberty was also recruiting, and also paid $8 an hour to, “wavers.” These were people who dressed up like the Statue of Liberty and paraded in front of the shopping center to attract customers. Wavers didn’t have to learn taxes but it was an outside job and Twinkle said that last year the office had had to let one go because she wouldn’t stay outside waving when it was snowing. “It sounds mean but that’s where we get the majority of our clients,” she said.
Brr. But what can I say? I was unemployed. I hoped I would get rescued before January, whether by a job offer, fairy godmother or death, but I started attending the Free Tax School.
The Free Tax School
I never saw Tats again, and other people came and went in the classes, so that I didn’t learn many names and anyway I don’t want to write here the ones I do know. But among the regulars were a middle-aged LPN I mentally dubbed Nursie; an adorable long-haired young woman who wore such cute and trendy outfits, with little hats and things, that I would squeal every time she walked in, so let’s call her Boots here, after her favorite footwear; and a very young, very pregnant girl who always wore sweatpants with her hair pulled back, so that it was difficult to imagine what she looked like cleaned up and I’m afraid my internal nickname for her was the Blob.
Twinkle would stand in front of the class talking about 1040s. Everybody else would talk about something else, babies or men or sex, the way women will in a group. The Blob would say, “This will be my last Christmas as a teenager and it looks like I’m going to spend it in the delivery room – just like last year!”
“Are you still on target with your due date?” Nursie would say, kindly.
“My two came close together, too,” another mother would say. “In fact, I can’t remember conceiving the second one. I think I was asleep.”
“Taxes!” Twinkle would remind them.
The Blob kept a pack of Marlboros on the empty chair between her and Nursie so that at first I hoped it wasn’t hers but Nursie’s. When they went outside at break, though, it turned out Nursie only smoked e-cigarettes. Twinkle smoked Marlboros, too, but she had her own pack. The Blob was smoking her way through her third trimester.
Nobody focused too hard on learning taxes but it didn’t turn out to matter all that much: The second part of the course was learning the “LibTax” computer software, and it was LibTax that did the actual work.
If you have ever used TurboTax to “e-file” through the IRS website you will understand the concept of LibTax, which is very similar. These programs ask you stuff like, “Did Robin receive any W-2s? What is listed in Box 7? Did anyone else live with Robin? During 2014, did Robin get married, join the military, become incarcerated or drop dead?” You just check boxes and fill in blanks. Anybody could do it.
The Human Condition
We spent longer on LibTax than on 1040s. You had to do 39 sample returns so you could get fast. The classes were long and boring and I felt defeated just being there – working for free in the hope of making $8 an hour! – but I began to see that the others were in the same boat.
Nursie told me she’d been looking for work for months without success, and sometimes felt so low she had a hard time leaving the house. She dropped out shortly after that.
The Blob’s husband worked in a factory where the heat had made him faint, necessitating an emergency room visit and complicating the young couple’s child care.
Boots was a single mother whose child had some kind of special needs. Autism? Asperger’s? “He wants to play with other kids,” she explained, “but he don’t know how.”
The manager, Twinkle, was also a single mother, and in December she told me she had had to choose between Christmas and paying the electric bill. She said Liberty paid her $10 an hour to teach for a maximum of six hours a day, or $60; but actually she had to stay there more or less from 9 a.m.-9 p.m. She had missed her daughter’s Christmas play at school.
So if compassion can be defined as expanding self-pity to encompass others, I guess that’s what happened to me. Once the Blob was sitting in my usual place when I arrived and I noticed that beneath the pregnancy and the sweatpants she was quite a pretty girl, with blond hair and periwinkle-blue eyes. Anyway, she was young, helpless and pregnant in a dog-eat-dog world, and I was older and wiser and should have been kind to her like Nursie. Instead I’d been thinking of her as the Blob. I beamed love and apology at her. She moved away uneasily.
Liberty’s Piece of the Action
But back to taxes: As a former preparer, I already knew the basics, but some things had changed since my first go-round. The Earned Income Credit, in effect a cash handout to help working poor who are raising children, had increased from a few hundred bucks to upwards of $6000, and on top of that there was the new Child Tax Credit of $1000 for each kid. These days, a modestly-paid worker with children, even one who had had no income taxes withheld at all, could receive thousands and thousands of dollars in tax “refund.”
And it shortly became clear that that’s what Liberty Tax was all about, getting a piece of that action. As Twinkle put it, “What do they care about giving us $3- or $400 if they’re getting back $6000?”
In addition to 1040s and LibTax, Liberty’s Free Tax School included courses in “Bank Products” and “Closing the Deal.” What was meant by “Bank Products” was an arrangement whereby clients could have their tax refunds channeled through Liberty, allowing Liberty to deduct its fees from the total before passing it on. That cost clients an additional $40 or so but Twinkle said almost all of them went that route because it was the only way they could afford Liberty’s fees.
What were the fees? That was always a mystery. When I asked in the beginning – because I wanted to know how much commission would come to – Twinkle explained they were wildly variable because the computer generated them based on which forms were involved, but that the minimum was probably $150-$250.
The computer added an amount for each W2 form, and if there was untaxed compensation on a 1099 – such as is received by many construction workers and house cleaners – it tacked on $200 for Schedule C plus $80 for Schedule SE, the form for computing the self-employment tax. Twinkle said that if you had self-employment income of any kind you couldn’t expect to get out of there on less than $500.
Shh!
Now, as for “Closing the Deal,” what that meant was keeping the clients from getting up and leaving when they found out what the fee was. And the way you did that, I learned shortly, was: You didn’t tell them.
The procedure was first to ascertain there was a refund, then enter all the tax information, finally reviewing the return with the client, ostentatiously turning the computer monitor around so he could follow along as you said, “You made $12,000 in wages, you’re head of household with two children, you had $550 in federal income tax withheld and you qualify for $4810 of Earned Income Credit.”
When you came to the refund, thouogh, you told him the amount he would receive after Liberty’s fees were deducted, not the gross amount.
But if the screen was turned toward the client so he could see the finished 1040, I objected, couldn’t he see the refund amount listed on line 75?
“You turn the screen back around before that,” said Twinkle.
The client was sent home with an information pack, but not, notably, with a copy of the 1040. “We’re a green company and we don’t waste paper,” said Twinkle. She said if customers came back later, though, and asked for a copy for whatever purpose, Liberty would in fact furnish one – free of charge, she added proudly.
That’th Dethpicable!
This all emerged bit by bit and there was never a point at which I did a big Daffy-Duck, “That’th dethpicable!” A mitigating factor was the instant cash offer, which the “wavers” advertised with signs they would flash at traffic: Anyone who allowed Liberty Tax to file or even “pre-file” their returns – entering their wage and withholding information from check stubs into the computer, pending arrival of W-2s – received $50 in cash up front. Then there was another $50 they could get for referring a friend.
I figured these offers (a) should alert even the most trusting that Liberty intended to charge them enough to make the freebies worthwhile; and (b) at least offset the $40 clients paid for the “bank product.”
It was clear that Liberty Tax was cashing in on the innocence and financial desperation of the poor. On the other hand, I was financially desperate enough myself that I took comfort in the assurance I had at least minimal employment lined up come January.
Lady Liberty Weeps
But January came and I didn’t! I finished the tax course and then the LibTax course, and as the new year progressed there was always something else I had to come in for – training modules in the Affordable Care Act or office procedures or "bank products." We preparers were also all encouraged to come hang out and watch Twinkle prepare tax returns if anyone walked in, maybe prepare some ourselves – we had had to pay $65 to the IRS for preparer ID numbers – but it was “on commission only” and there was no talk of putting anybody on payroll.
So far, the only paid workers were the “wavers,” who were now prancing around at the intersection, trying to drum up business. They wore what looked like green velveteen tablecloths and on their heads little diadems. Some looked more like the Statue of Liberty than others. Once when I went out to the parking lot I saw one of them, still in uniform, sitting in his car smoking a cigarette and crying. Well, it couldn’t have been anybody’s dream job.
Anyway, I hung around and hung around, waiting for something to happen. Other preparers kept disappearing. Once I went into the back, where there was a refrigerator and microwave, and found a goodbye note scrawled on a paper plate: “Sorry Twinkle this job ain’t for me. Love, Boots.”
That made me smile – like everything else about Boots, it had a certain style – but I inwardly quibbled at the word “job.” Didn’t that imply wages?
Finally, toward the end of January, Twinkle held a “mandatory staff meeting” (which didn’t involve wages, either). She wanted to show us how to finalize a return, and because that entailed completing and printing 16 separate forms, and she didn’t like wasting paper, she wanted to show everybody at once and not have to go through it twice. I thought: Good luck with that.
Does It Mean I Don’t Get the $50?
But of course she didn’t have any luck at all. Equipment failed and anyway the meeting was never finished because clients chose that day to finally start coming in. Twinkle told me to wait on one and I surely would have though, “staff meeting” or not, I was still not on the clock. However, the computer wouldn’t accept my sign-on so in the end I sat beside another preparer as she keyed in the information.
Our customer wasn’t eligible for the Earned Income or Child Credit, and his refund was small enough that it was mostly eaten up by Liberty’s fees. I found it awkward telling him how much he had coming back – and not telling him how much we were charging him – but fortunately all he seemed concerned about was getting the $50 cash giveaway.
Meanwhile another preparer at another desk had another client, a cement worker or something, who had brought in a 1099 for $1900 in nonemployee compensation from which no taxes had been withheld. (I wasn’t precisely eavesdropping but this was a lady I had internally nicknamed the Foghorn because of her voice like a sonic boom that smoked Marlboros.)
The Foghorn was earnestly trying to help the guy come up with expenses against the income, but Twinkle was hearing all this too and she went over to the Foghorn’s desk and said, “This is your problem right here,” jabbing a finger at the computer screen. I knew she was pointing at the fee – remember, $200 extra for Schedule C, $80 for SE, and the guy had less than $2000 in income and no big federal dollars coming back.
So Twinkle and the Foghorn gathered the guy’s papers up and sent him packing. He went peacefully. His only regret was: “Does this mean I don’t get the $50?” It did.
Not a Team Player
That was the last day I ever went to Liberty Tax. But I didn’t quit! Before I left, I said to Twinkle, “Call me when you need me.” She never did.
I didn’t mind. I thought what Twinkle wanted was for everybody to keep coming in unpaid indefinitely and I had had enough of that. Meanwhile, though I hadn’t landed a job offer, I had scraped up a couple little freelance gigs. So things weren’t quite as desperate as they had been chez moi and it wasn’t as if I’d ever really ached to help Liberty cheat the poor anyway.
So I didn’t have anything else to do with Liberty Tax until recently, when I found out the IRS wouldn’t refund my $65 for the tax preparer ID. Then I formally requested Liberty to reimburse it to me, since I had paid it as a requirement of employment, in the understanding I would be employed. I sent copies of the request to the corporate office and to Twinkle at the local one.
I hadn’t had much hope and I wasn’t surprised at being refused, though I was amused at the reasons Twinkle provided for not having employed me, among which was that I was “not a team player.” I wondered whether that had anything to do with me not smoking Marlboros.
The Reason I’m Telling You This
Anyway! For me, Liberty Tax was the most preposterous waste of time, but it struck me – and this is the reason I’m telling you all this – that the experience was a perfect metaphor for, and microcosm of, the economy, and basically What’s Wrong With America Today.
Liberty Tax makes its money charging the poor and unsophisticated exorbitant fees for something they could easily do themselves or, lacking the concentration to sit down and try, have done free by the IRS or volunteers at the local library. And the poor let them do it, not asking the fee but cheerfully exchanging their future $4- or $500 for the $50 bill offered to them by some schmo in a green tablecloth.
It reminds me of that saying about “trickle-up economics,” that the rich shouldn’t worry because no matter how much money you give the people at the bottom, the people at the top are always going to end up with it anyway. Liberty takes its cut of the federal handout before the poor even set eyes on the check.
So the poor are getting gutted but what’s worse is that the hands-on gutting is done by another set of people also being cheated by Liberty, the ground-level “employees” who are working either for almost nothing or just nothing-nothing, in the hope of eventually graduating to almost-nothing.
These “employees” are in the same, or worse, economic boat as the clients – Liberty actually recruits for its “Free Tax School” from its prior-year customer base – but they keep on helping Liberty gouge their brethren. For most of us – for me, anyway – this is due to sheer financial desperation, but others dream of buying their own store and collecting the big bucks themselves.
It’s the hallowed Free Market gone wrong, everybody screwing over everybody else and nobody allowed to opt out because we all have to eat, the haves cheating the have-nots and the have-nots cheating other have-nots instead of demanding change.
Me, I want to shout STOP STOP THIS IS WRONG but I’m not sure who to shout it to, so I reckon I must settle for finding a paper plate of my own and summing it up:
“Sorry America this ain’t the economy for me.”
