Q: For past few weeks, I have seen ads touting that $42 billion in rebate checks is available to taxpayers. How can average taxpayers get their hands on some of this?
Charles Lee, of Mascoutah
A: This reminds me of one of those sleazy ads hyping a TV aerial that looks like a miniature satellite dish.
“Get free HDTV signals over the airwaves!” the ad trumpets. “No need for expensive cable or satellite subscriptions!”
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Well, duh. This cheesy product does nothing more than a cheap pair of rabbit ears with tinfoil flags because signals from public TV stations such as KMOV and KSDK have been free since the birth of the boob tube. But because the antenna is shaped like a satellite dish, this company hopes you’ll think you also will be able to receive pay-TV services like HBO, Showtime and MTV for free — which, of course, you will not.
The ad you saw seems to be based on the same slimy principle — implying you’ll get secret information to reap hundreds or thousands of dollars that you might otherwise forfeit. For the past year, several unscrupulous businesses have been offering memberships or newsletters for as much as $50 to learn how to share in a program passed by Congress that offers “a cash rebate on every single purchase.”
I hope none of my readers has fallen for this. While there is a tiny grain of truth at the root of this claim, most Illinois taxpayers will not share in this government largess. And, even if you do, you’ll do it almost automatically, probably without even realizing it. Here’s why you should turn thumbs down on this offer:
Ever since Illinois adopted its income tax in 1969, state residents have been able to use their state tax bill as a deduction on their federal income taxes. The same is true for those who live in the other 40 states that also levy an income tax (as well as people who live in cities that levy an income tax).
Well, in 2005, Congress decided it wasn’t fair that residents of the nine states without an income tax could not enjoy this benefit. So, every year since then, Congress voted to allow all taxpayers to deduct either their state and local income taxes or the total of their state and local sales taxes, whichever was greater. Then, last Dec. 15, President Obama signed a law that made the sales tax deduction option permanent. The cost of the program is estimated at $42.4 billion.
As you can see, there was no change over what already was going on for a decade. Nevertheless. slimeballs started coming out of the woodwork to say, “Buried deep inside the act, in Section 106, is a hidden bombshell ... one that deserves your immediate attention! In short, it contains a program that gives every taxpaying American the right to collect a cash rebate on nearly every single purchase made in 2016!”
This “rebate,” of course, is simply the federal tax deduction you would take for the sales tax you paid on each purchase. However, unless you have a low income or made unusually large purchases, you’ll likely opt for the income tax deduction over the sales tax deduction, so the program doesn’t even apply to most people (like me).
So remember three things: This is simply a long-standing tax deduction, not a new rebate program. If you choose it, you can take the deduction on your 2016 federal tax return without paying anyone a penny to find out how (my advice is still free).
Most important, as always, if something sounds too good to be true, it probably is.
Where would you go to tour the National Mining Hall of Fame?
Answer to Wednesday’s trivia: I will probably be on every environmentalist’s blacklists for a while. To fly me and roughly 90 others 32,380 miles around the world, our Boeing 757-200 used an estimated 78,000 gallons of jet fuel during its 69 hours and 25 minutes of flight time.