by Cynthia Harrington
In the current climate of global conflict, CPAs are stepping up to serve those American families that are most directly impacted by war — whether in Iraq or in other international flash points.
As these families’ lives become more complicated as a result of their active military duty, so do their financial affairs. Several state societies now have programs to provide free tax advice and support to those who are called to serve.
CPA John Myers Jr. volunteers for a program under the auspices of the Illinois Society of CPAs, and has personally helped over 10 families located near his firm, Myers & Myers CPAs, in Beardstown, Ill. Myers and 118 other tax professionals received special training and get ongoing support from both the Illinois society and the Internal Revenue Service. The Illinois CPA Society’s community service arm, CPAs for the Public Interest, created the Military Service Tax Assistance Project in 2003.
One of the challenges for CPA volunteers is the specialized technical information that is needed to help military families. To answer that need, the IRS in Illinois provides a senior tax specialist for telephone requests and to reference the IRS publications containing specialized knowledge.
As an example, overseas pay is complicated. Service members generally get paid on the 15th and at the end of month. The complications arise when the service man or woman enters combat duty. While in combat, the salary is tax-free. The paychecks arrive at the usual time, net of taxes. Then the family receives a third check the following month in the amount of the federal tax withheld.
“Most don’t even understand how the military payroll system works,” said Myers.
Not only do families need an explanation of how this works, but CPA volunteers are aware of the implications of the tax-free pay. The telephone assistance is provided through the office of Patricia Kirk, Illinois territory manager at the Stakeholder Partnerships, Education and Communication Office of the IRS in Chicago. “The fact that this pay is not taxed means the money is not eligible in calculating the earned income tax credit nor the refundable portion of the child tax credit,” said Kirk.
Kirk and CPAs for the Public Interest, in Illinois, became natural partners in serving the new demand for tax assistance by military families. The two organizations addressed logistical issues as well as program details before launching the effort in early 2003. The Illinois initiative provides one-on-one assistance for tax exclusions and filing and payment extensions.
“We didn’t see much demand last year, but we’re glad we kept the program going,” said Elaine Weiss, JD, president and chief executive of the Illinois CPA Society. “As the war drags on, many more lives continue to be impacted. We’ve had 57 requests for help so far this year.”
A nationwide effort
Other states report similarly growing interest.
New Hampshire recently launched an effort and has 65 participating firms that have processed tax documents for 95 families.
Successful programs are those that got the word out to the target audience through sometimes complicated communication channels. Marlene Gazda, executive director of the New Hampshire Society of CPAs, in Manchester, N.H., credited their success to a close working relationship with the officers of the New Hampshire National Guard and reservists.
Kirk said that the challenge of how to make the military aware of the free program was first on their task list, as members of the military are scattered throughout the large state of Illinois. Additionally, she didn’t want the new program to be seen as competing with the volunteer income tax assistance sites already established at some locations. “We established communication channels right away, because we wanted them to know we would complement those sites.”
The Illinois program also gained support from the office of the state’s lieutenant governor. Eric Schuller, senior policy advisor for Lt. Governor Pat Quinn, pointed to his office’s Web site, which helped publicize the Illinois program.
He said that www.operationhomefront.org gets 150,000 hits a week, many from outside Illinois. The site provides direct information on the tax assistance program, information on a similar program for legal advice from the Illinois State Bar Association, and links to other types of support. “A family’s financial situation gets very complicated when they get deployed,” says Schuller. “With over 300,000 national guard and reservists called to active duty since 9/11, the need is great to help families with these new issues.”
In addition to trying to communicate with far-flung locations, the structure of the military presented obstacles. The IRS’s Kirk said that the project got a turn of luck. “We recruited a retired CPA who also was retired military who really helped us navigate the military communication channels,” she explained. “Without his help, it would have taken a longer time, and would have taken much more of my staff’s support to get out the word of the free assistance.”
Families usually come in for the simple help of filing the 180-day extension that is available to those in the military. But in addition to providing tax advice, Myers is asked for a variety of answers to financial questions. “One family lost their medical insurance after a month because their employer wouldn’t keep it up,” Myers said. “We helped them with the deductions for the medical expenses and travel, until the military directed them to other services.”
Myers helps out with a variety of advice and counsel to military families who seek his help. He says that many are suffering financially and have experienced significant drops in income. He provides what advice he can, and draws on contacts in other fields to assist, as well.
He said that a client of 10 years dropped by the office just to talk about her son in Iraq. She was especially worried when she found out that he had been in Baghdad during the early days of the conflict there. “She needed to talk to someone about what was happening,” said Myers. “These are the times I notice that it pays to be friends with clients, and that we do more for them than just their tax returns.”
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