Source: USA TODAY

Another day, another headache for the Internal Revenue Service.

This time, the federal agency is being accused of mishandling the tax returns of adoptive families.

A report from the IRS’s Taxpayer Advocate Service says that 90% of families who claimed the adoption tax credit during the 2012 filing season had their returns flagged for further review. Nearly 70%t had at least a partial audit of their tax return.

But the majority of the cases where the tax credit was audited — more than 35,000 returns in all — resulted in no changes.

The Taxpayer Advocate report says the IRS’s handling of the adoption tax credit was a essentially a nightmare.

“The IRS’s misguided procedures, and its failure to adequately adjust these processes when it learned its approach was seriously flawed, have caused significant economic harm to thousands of families who are selflessly trying to improve the lives of vulnerable children,” said the report.

Among those families are Jake and Elfie Dotson of Clarksville. They’ve been dealing with the IRS for more than a year, trying to finalize their 2011 tax return.

Jake Doston is expecting a refund of several thousand dollars, which will help offset the $11,000 in fees they paid for the adoption. He says that because the IRS hasn’t approved the tax credit, the agency claims the Dotsons still owe taxes.

“The IRS is telling me that I owe them money they haven’t paid me, plus interest and penalties,” he said.

The problem with the tax returns started in 2010, with the passage of the Patient Protection and Affordable Care Act, often known as “Obamacare.”

That law changed the way the IRS handled the tax credit for adoptions. It raised the maximum credit to $13,170 per child and made the credit refundable and retroactive. That meant the credit could could boost a family’s tax refund by thousands of dollars.

In the past, many families had not qualified for the full credit. But the new rules made more families eligible for larger refunds, said Becky Wilmoth, a registered tax return preparer for Bills Tax Service of Centralia, Ill.

“A lot of people were able to go back and amend their returns from past years,” said Wilmoth, who specializes in returns for adoptive families.

The new rules meant the total amount of money refunded jumped fourfold.

For the 2009 tax year, 81,430 taxpayers claimed the adoption tax credit, for a total of $280.6 million. For 2010, 110,591 taxpayers claimed $1.2 billion in credits. In 2011, 51,539 taxpayers claimed $668.1 million in credits.

“I don’t think they knew there were that many adoptive families out there,” said Wilmoth.

Wilmoth said most families who had trouble with the IRS didn’t get a full-blown audit, including interviews with IRS agents. Instead, they got a review of the paperwork for their adoption tax credit. That still causes a lot of anxiety, she said.

But most families eventually got their tax refunds, with interest. According to the IRS report, the median refund for the adoption tax credit was more than $15,000.

“Yes, they had to wait,” Wilmoth said. “But you are also talking about a lot of money.”

An IRS spokeswoman said that in the past, other refundable tax credits had led to fraud. So the agency was trying to prevent that from occurring with the adoption credit.

“The IRS implemented the adoption credit program with an approach that balanced the objective of paying legitimate credits in a timely manner with that of ensuring that claims were accurate,” Michelle L. Eldridge, chief of National IRS Media Relations in a statement.

“Our experiences and lessons learned from other refundable credits taught us that high dollar credits have high risk and the potential for fraud. We must ensure delivery of the credit to those entitled while protecting the government’s interest in minimizing exposure to fraud.”

News of the adoption audits fueled more online criticism of the IRS. The agency already is under fire after it apologized for targeting Tea Party groups and pro-life groups that had applied for tax exemptions. There does not seem to be any political motive behind the adoption credit audits.

Chuck Johnson, president and CEO of the National Council for Adoption, said he thinks the amount of money involved in the refunds was the issue. He also thinks there were fears that some people might misuse the credit.

That didn’t prove to be the case. The IRS disallowed less than 2 percent of the total tax credits claimed, according to the Tax Advocate Service report.

“The good news is that the kind of people who adopt children don’t try to cheat on their taxes,” said Johnson.

Holly Spann, the Tennessee representative for the American Adoption Congress, said in an email that she was disappointed to see that “such a large number of adoptive parents are going through so much unwarranted analysis by the IRS and having their refunds short-changed….”

Adoptive families who had their tax refunds delayed said that complying with the IRS’s requirements was complicated.

David French of Columbia, Tenn., a blogger and lawyer for the American Center for Law and Justice, said that he and his wife, Nancy, filed for the adoption credit in 2011, after adopting their daughter from Ethiopia. Over the summer, they received a letter from the IRS requesting more paperwork, including receipts for their expenses.

They were able to send copies of the receipts for their plane tickets as well as the fees they paid to their adoption agency. But most of their expenses while traveling in Africa were paid in cash.

“Even your hotel doesn’t take a credit card in Ethiopia,” he said.

Families who adopt from overseas often run up tens of thousands of dollars in debt to pay for the adoption. Getting the tax credit can make it easier for middle-class families to adopt, said French. The median income for taxpayers who got the adoption credit was $64,000.

The adoption tax credit is no longer refundable, which has made it easier for taxpayers who claimed the credit for 2012. Wilmoth said only two of her clients have had their credits reviewed this year.

That may change if the credit becomes refundable in the future. Senators Bob Casey, D-Pa., and Mary Landrieu, D-La., along with Rep. Bruce Braley, D-Iowa, introduced the Adoption Tax Credit Refundability Act of 2013 on Thursday, to make that happen.

Jake Dotson said he’d just like to see his troubles with the IRS be over. He said most people already have a negative view of the agency, because no one likes to pay taxes. The recent controversies have made things worse.

“Nobody trusts them,” he said.

Smietana also reports for The Tennessean in Nashville.

Copyright © 2013 USA TODAY, a division of Gannett Co. Inc.

Source: USA TODAY

Another day, another headache for the Internal Revenue Service.

This time, the federal agency is being accused of mishandling the tax returns of adoptive families.

A report from the IRS’s Taxpayer Advocate Service says that 90% of families who claimed the adoption tax credit during the 2012 filing season had their returns flagged for further review. Nearly 70%t had at least a partial audit of their tax return.

But the majority of the cases where the tax credit was audited — more than 35,000 returns in all — resulted in no changes.

The Taxpayer Advocate report says the IRS’s handling of the adoption tax credit was a essentially a nightmare.

“The IRS’s misguided procedures, and its failure to adequately adjust these processes when it learned its approach was seriously flawed, have caused significant economic harm to thousands of families who are selflessly trying to improve the lives of vulnerable children,” said the report.

Among those families are Jake and Elfie Dotson of Clarksville. They’ve been dealing with the IRS for more than a year, trying to finalize their 2011 tax return.

Jake Doston is expecting a refund of several thousand dollars, which will help offset the $11,000 in fees they paid for the adoption. He says that because the IRS hasn’t approved the tax credit, the agency claims the Dotsons still owe taxes.

“The IRS is telling me that I owe them money they haven’t paid me, plus interest and penalties,” he said.

The problem with the tax returns started in 2010, with the passage of the Patient Protection and Affordable Care Act, often known as “Obamacare.”

That law changed the way the IRS handled the tax credit for adoptions. It raised the maximum credit to $13,170 per child and made the credit refundable and retroactive. That meant the credit could could boost a family’s tax refund by thousands of dollars.

In the past, many families had not qualified for the full credit. But the new rules made more families eligible for larger refunds, said Becky Wilmoth, a registered tax return preparer for Bills Tax Service of Centralia, Ill.

“A lot of people were able to go back and amend their returns from past years,” said Wilmoth, who specializes in returns for adoptive families.

The new rules meant the total amount of money refunded jumped fourfold.

For the 2009 tax year, 81,430 taxpayers claimed the adoption tax credit, for a total of $280.6 million. For 2010, 110,591 taxpayers claimed $1.2 billion in credits. In 2011, 51,539 taxpayers claimed $668.1 million in credits.

“I don’t think they knew there were that many adoptive families out there,” said Wilmoth.

Wilmoth said most families who had trouble with the IRS didn’t get a full-blown audit, including interviews with IRS agents. Instead, they got a review of the paperwork for their adoption tax credit. That still causes a lot of anxiety, she said.

But most families eventually got their tax refunds, with interest. According to the IRS report, the median refund for the adoption tax credit was more than $15,000.

“Yes, they had to wait,” Wilmoth said. “But you are also talking about a lot of money.”

An IRS spokeswoman said that in the past, other refundable tax credits had led to fraud. So the agency was trying to prevent that from occurring with the adoption credit.

“The IRS implemented the adoption credit program with an approach that balanced the objective of paying legitimate credits in a timely manner with that of ensuring that claims were accurate,” Michelle L. Eldridge, chief of National IRS Media Relations in a statement.

“Our experiences and lessons learned from other refundable credits taught us that high dollar credits have high risk and the potential for fraud. We must ensure delivery of the credit to those entitled while protecting the government’s interest in minimizing exposure to fraud.”

News of the adoption audits fueled more online criticism of the IRS. The agency already is under fire after it apologized for targeting Tea Party groups and pro-life groups that had applied for tax exemptions. There does not seem to be any political motive behind the adoption credit audits.

Chuck Johnson, president and CEO of the National Council for Adoption, said he thinks the amount of money involved in the refunds was the issue. He also thinks there were fears that some people might misuse the credit.

That didn’t prove to be the case. The IRS disallowed less than 2 percent of the total tax credits claimed, according to the Tax Advocate Service report.

“The good news is that the kind of people who adopt children don’t try to cheat on their taxes,” said Johnson.

Holly Spann, the Tennessee representative for the American Adoption Congress, said in an email that she was disappointed to see that “such a large number of adoptive parents are going through so much unwarranted analysis by the IRS and having their refunds short-changed….”

Adoptive families who had their tax refunds delayed said that complying with the IRS’s requirements was complicated.

David French of Columbia, Tenn., a blogger and lawyer for the American Center for Law and Justice, said that he and his wife, Nancy, filed for the adoption credit in 2011, after adopting their daughter from Ethiopia. Over the summer, they received a letter from the IRS requesting more paperwork, including receipts for their expenses.

They were able to send copies of the receipts for their plane tickets as well as the fees they paid to their adoption agency. But most of their expenses while traveling in Africa were paid in cash.

“Even your hotel doesn’t take a credit card in Ethiopia,” he said.

Families who adopt from overseas often run up tens of thousands of dollars in debt to pay for the adoption. Getting the tax credit can make it easier for middle-class families to adopt, said French. The median income for taxpayers who got the adoption credit was $64,000.

The adoption tax credit is no longer refundable, which has made it easier for taxpayers who claimed the credit for 2012. Wilmoth said only two of her clients have had their credits reviewed this year.

That may change if the credit becomes refundable in the future. Senators Bob Casey, D-Pa., and Mary Landrieu, D-La., along with Rep. Bruce Braley, D-Iowa, introduced the Adoption Tax Credit Refundability Act of 2013 on Thursday, to make that happen.

Jake Dotson said he’d just like to see his troubles with the IRS be over. He said most people already have a negative view of the agency, because no one likes to pay taxes. The recent controversies have made things worse.

“Nobody trusts them,” he said.

Smietana also reports for The Tennessean in Nashville.

Copyright © 2013 USA TODAY, a division of Gannett Co. Inc.

Source: USA TODAY

NASHVILLE, Tenn. — Kathleen McCleavy has lost count of how many doors she has knocked on as a missionary for the Church of Jesus Christ of Latter-day Saints in Nashville for the past 18 months.

But she still remembers the first.

McCleavy, 23, was newly arrived in the Bible Belt from her hometown of Cordoba, Alaska, a small town where she rarely encountered strangers. Her goal for the day — reach people who speak Spanish, a language she’d only begun learning.

Back then, communication trouble started right after Hola and Como estas?

Not anymore.

“Before my mission, I was kind of shy,” she said. “Now I love talking to everyone.”

McCleavy is a leader among the approximately 220 Mormon missionaries in the Tennessee Nashville Mission. She also is one of a growing number of “sister missionaries,” who are changing the public face of their church.

When she arrived in 2011, there were about two dozen sister missionaries in Nashville. Now there are 60, with 40 more on the way.

In the past, young women such as McCleavy had to wait until they were 21 to go on a mission. Young men, on the other hand, could serve at 19. Now women can serve at 19 and men at 18, after a rule change in October.

Numbers grow

The total number of Latter-day Saint missionaries has jumped from 58,513 to 66,731 over the past six months. The boom in missionaries led church officials to plan 58 new mission sites worldwide. In the U.S., those include Cincinnati; Wichita, Kan.; Macon, Ga.; and Salem, Ore. Places such as Nashville are getting more because the church saw room for expansion.

More than a third of the new missionaries are women. Joanna Brooks, Mormon blogger and author of “The Book of Mormon Girl,” said that will change the brand of their church.

“For more than 50 years, the dominant public image of Mormons has been young men in white shirts and black suits,” said Brooks, an English professor at the University of San Diego. “The image now will be equally well-scrubbed, well-dressed, young Mormon women.”

Brooks, a Brigham Young University graduate, said the old rules made it harder for women to be missionaries. At 21, most were finishing college, getting married and starting careers. It’s why Brooks didn’t go on a mission herself, she said, but she would like her daughter to go.

Now they can do a mission first, she said. That puts them on equal footing with young men in the church.

“This sends a powerful message that men and women can serve shoulder to shoulder as leaders,” she said.

Opportunity embraced

On a recent Tuesday after, a group of 28 local missionaries gathered for leadership training in Brentwood. Among them was 20-year-old Janeen Johnson, a native of Malta, Idaho.

She’d been a student at Brigham Young’s Idaho campus when the rules were changed. She applied to be a missionary soon after she heard the news.

“I thought, ‘This could happen now,’” she said. “It had always seemed so far in the future.”

As least for now, the missionaries said, women get a warmer reception when they knock on doors. That’s in part because people are surprised that women can be Mormon missionaries.

Hollie Vandenberg, originally from Roy, Utah, said she is glad for new missionaries, both men and women. There’s more than enough work to do for all of them.

“We are both needed out here,” she said. Local church officials adjusted to their program to accommodate the influx of sister missionaries. William McKee, president of the Tennessee Nashville Mission, said that he tries to give the sister missionaries cars rather than bicycles to help them get around. Some of the sisters prefer the bikes, he said.

They’ve also taken a safety precaution for women and men, telling them to bring local volunteers along when they are out at night.

“We encourage all of our missionaries to go out with a local member anytime after 5 in the evening,” he said.

Bound for Brazil

The rule change also means that Nashville will be sending out more missionaries as well.

Olivia Troseth, 19, of Franklin left in mid-April for Salt Lake City for training before heading to Brazil.

Troseth said the rule change came at a good time for her. She’d finished her general education classes at school but wasn’t ready to commit to a major.

Along with buying a new wardrobe — including skirts that fall below her knees and loose-fitting blouses to keep cool in Brazilian heat — Troseth started a fitness routine to prepare for walking 10 miles a day as a missionary. She also listened to the Mormon Scriptures in Portuguese, a language she’ll study in training.

Troseth said she hopes that more young Latter-day Saints, both men and women, will go out on missions in the future. “Holy Father has given us this wonderful gospel.” she said. “And some of us just sit around and do nothing about it.

“We just need to get up and go and tell people.”

Smietana also reports for The Tennessean

Copyright © 2013 USA TODAY, a division of Gannett Co. Inc.