VITA to Begin 6 February – Navy Unveils Changes to this Year’s Tax Assistance Program

By: LTJG Nick Linstroth, VITA Coordinator, Navy Region Northwest

The Volunteer Income Tax Assistance (VITA) program assists eligible persons with preparation and filing of state and federal income taxes at no cost. In accordance with NAVADMIN 357/11, tax centers will be operating as self-service sites this year. The self‐service program is centered on a model that offers tax assistance centers equipped with computer stations where customers prepare their own tax returns with the assistance of a core group of IRS-trained volunteers.

A primary goal of self‐service is to educate our customers so that they will understand and have the ability to complete their own tax returns. “Self-service tax preparation helps educate Sailors and dependents in preparing their own tax returns, thereby promoting self-reliance and financial accountability,” said Vice Admiral John M. Bird, Director of Navy Staff.

The on-site volunteers are servicemembers and civilians who have been trained by the IRS. Although the VITA program is designed to be self-service, these volunteers will be ready and able to answer questions and provide guidance to individuals who are preparing their tax returns on the computers.

Also changing this year are the eligibility requirements for tax preparation services. Active-duty military and their dependents still qualify for VITA service, but retirees, retiree dependents, and former spouses with an adjusted gross income over $57,000 will not be eligible for assistance at the VITA self-service tax centers. Last year’s tax returns likely offer a good estimate as to a taxpayer’s adjusted gross income for the upcoming filing season.

Navy Region Northwest will offer three self-service tax centers that will operate on a walk-in basis. Sites will be open 6 February through 17 April 2012 at the following locations, with the following operating hours:

1. Naval Base Kitsap-Bangor:  Plaza Building between the Inside Out Café and the Khaki Club

  • Monday – Thursday 1000 – 1800
  • Friday 1000 – 1600
  • 2nd and 4th Saturdays of each month 1000 – 1400
  • closed federal holidays
  • Phone: (360) 315-8202

2. Naval Base Kitsap-Bremerton: Navy Operational Support Center (NOSC), BLDG 1013, 2nd Deck

  • Monday – Friday 0800 – 1600
  • closed federal holidays
  • Phone (360) 627-2232

3. Naval Station Everett: Navy Operational Support Center (NOSC), BLDG 2106, Room 220, 2nd Deck

  • Monday – Friday 0800 – 1600
  • closed on federal holidays
  • Phone (425) 304-3884.

Please note that the hours of operation are subject to change based on customer demand and/or volunteer staffing requirements. Those seeking tax assistance are encouraged to call their preferred site with questions regarding hours or eligibility requirements.

Individuals seeking assistance should bring the following information to the tax center:

  • All W-2s
  • Social security card(s)/number(s) (or other equivalent identification) for spouses and all dependent family members
  • Form 1099(s)
  • Bank statements
  • Proof of child care expenses
  • Daycare provider information
  • Form 1098 mortgage interest statement(s)
  • Divorce decree(s) or dependent exemption certificate(s)
  • IRA information, stock information
  • Last year’s federal and state tax returns
  • Direct deposit information (account and bank routing number)
  • Any other tax related forms that might be in question.

If you are married, wanting to file a joint tax return, and your spouse does not accompany you to the tax center, you must provide either a special power of attorney (available at a Naval Legal Service Office), or an IRS power of attorney (IRS Form 2848 found at http://www.irs.gov). Either power of attorney requires a signature from the absent spouse; the special power of attorney must be notarized.

For more information, contact the Naval Legal Service Office nearest you. You can also get tax updates on Facebook at Naval Legal Service Office Northwest.

POC: LTJG Nick Linstroth, Region Tax Officer, JAGC, USN, (425) 304-4562.

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In the Market for a Used Car? How a Spot Delivery Car Sale Could Affect You

By CAPT Tom Wallace, JAGC, USNR

The most common car purchase problem reported to Navy legal assistance providers by Sailors and dependents is the “spot delivery” or “yo-yo” car sale. Typically, problems include violations of State Unfair and Deceptive Trade Practice Acts and Federal consumer law violations under the Truth in Lending Act (TILA) and the Federal Odometer Act.

In a spot delivery or yo-yo car sale, a Sailor/Marine agrees to buy a used vehicle. They sign a purchase contract and a retail installment sales contract (RISC) and the dealer lets them leave the car lot with the vehicle before the RISC is actually approved by a bank. The Sailor/Marine mistakenly believes that they already own the vehicle despite the fact that in many states the sale is not complete until the bank approves the vehicle loan.

Some Sailors/Marines, once informed that their loan has not been approved and they do not “own” the vehicle, sadly opt to sign a costly and dealer-friendly new RISC with higher interest rates and higher monthly payments. The dealer benefits from the servicemember’s affection for their new car and calculates the Sailor/Marine won’t balk at paying more than they bargained for to keep it!

So how can you avoid the trap of spot delivery or “yo-yo” car sales?

• Do your homework. Fully research the vehicle you want to buy and make sure it
meets your transportation and personal needs. Avoid any impulse buying and arrive at the car lot you’ve selected with confidence in the car you want and what price you think you should pay. Multiple web-based resources exist to give you a good idea how much you should pay for any car and how many dealers in your area have the car you want. Negotiate with them and be prepared to walk away for a better deal!

• Understand your credit. Unless you are able to pay for your car outright, you
will need somebody to finance a loan. That might be a bank, credit union, or even the dealer themselves. You should be particularly careful when the dealer is the financier! It is recommended you seek financing from a bank or credit union if possible as they generally offer better, more reliable terms for your loan. The terms of the loan offered to you by the bank or credit union will be based on your credit history and ability to pay. (Another reason a good credit history of not assuming too much debt and always paying your bills on time pays off!) Many banks and credit unions will even “pre-approve” you for a car loan making your negotiations with the car dealer that much easier. Discuss your car-buying strategy with your bank or credit union lender for tips on negotiating with dealers. If for whatever reason you are unable to secure a bank or credit union loan, you should still be aware of the general interest rates they charge for loans in your area. You should use these rates as your basis for any negotiation with a dealer financier & be wary of paying rates in excess of typical bank rates! Today’s rates are at historic lows, and even Sailors/Marines with poor credit history should be able to avoid excessive interest rates.

• Bring a copy of your RISC to Base Legal for review BEFORE YOU SIGN
IT! As an adult, you are generally liable for any contact you sign. Any honest car dealer should have no problem with providing you a copy of your RISC for review by Navy Legal. Take advantage of this free service, make an appointment, and talk to a Navy lawyer before you sign on the dotted line! Navy lawyers and your local Fleet & Family Service Center can also provide guidance regarding measures to improve your personal finances and perhaps a better deal, for a better car, sometime down the road.

Finally, be wary of additional scams attempted by unscrupulous car dealers:

• If you’ve provided a trade-in as part of your deal, a questionable dealer might advise you need to sign a new RISC at a higher interest rate because your trade-in has been sold but your loan won’t be approved without that higher rate. Now you have no car & have to sign? Not True! Most states outlaw the transfer of ownership of your trade-in until the financing on your new car has been approved. If a dealer makes such a claim, ask them to put it in writing and immediately contact a Navy lawyer!

• Some dealers may also claim, and even write in their contracts, that if your financing isn’t approved by a lender and you must return your car, you will owe them a “rental fee” for the time you drove it. This is not true and do not agree to this provision.

Bottom Line – nobody can force you to sign a contract and with some effort you can set yourself for success with a fair deal for a vehicle you want. For further assistance on legal issues involving car purchases and other consumer issues, please consult your local legal assistance office at Bremerton, Bangor, Everett or Whidbey Island.

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Recent foreclosure? You may be entitled to relief

By: Office of the Judge Advocate General, Code 16

Office of the Comptroller of the Currency (OCC) recently announced an independent foreclosure review. Under enforcement actions taken in April by the OCC, the Federal Reserve, and the Office of Thrift Supervision, 14 large mortgage servicers were required to correct deficiencies in their servicing and foreclosure processes and to engage independent firms to conduct a multi-faceted independent review of foreclosure actions that occurred in 2009 and 2010.

The independent consultants are charged with evaluating whether borrowers suffered financial injury through errors, misrepresentations, or other deficiencies in foreclosure practices and determining appropriate remediation for those customers. Where a borrower suffered financial injury as a result of such practices, the consent orders require remediation to be provided.

Earlier this month, the 14 mortgage servicers covered by the enforcement actions began mailing letters to eligible borrowers regarding the independent review process. The letters explain how to request a case review if the borrower believes he or she suffered financial injury as a result of errors, misrepresentations, or other deficiencies in foreclosure proceedings related to the borrower’s primary residence between January 1, 2009 and December 31, 2010.

Examples of situations that may have resulted in financial injury are:
•The mortgage balance amount at the time of the foreclosure action was more than the borrower actually owed;
•The borrower was doing everything the modification agreement required, but the foreclosure sale still occurred;
•The foreclosure action occurred while the borrower was protected by bankruptcy;
•The borrower requested assistance/modification, submitted complete documents on time, and was waiting for a decision when the foreclosure sale occurred;
•Fees charged or mortgage payments were inaccurately calculated, processed, or applied; and
•The foreclosure action occurred on a mortgage that was obtained before active duty military service began and while on active duty, or within 9 months after the active duty ended and the servicemember did not waive his/her rights under the Servicemembers Civil Relief Act.

Requests for a review must be received by April 30, 2012. For more information about the review and claim process, including a list of participating mortgage servicers, go to www.independentforeclosurereview.com.

Assistance with requesting a review and answer to questions about the process are available at 1-888-952-9105, Monday through Friday from 0800 to 2200 (EDT) and on Saturdays from 0800 to 1700 (EDT).

In addition to the outreach and claims program, independent consultants will also review a variety of sample cases from each servicer. Where they identify issues, they will conduct additional secondary reviews to indentify as many affected borrowers as possible.

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Beware: Photocopying your military ID could be criminal

Attribution: Robert Tizon, ESGR Security Bulletin 27 Oct 11

Recent incidents regarding the photocopying of military identification cards and common access cards (CAC), by commercial establishments to verify military affiliation or provide government rates for service, have been reported.

Personnel are reminded that the photocopying of US Government Identification is a violation of Title 18, US Code Part I, Chapter 33, Section 701 and punishable by both fine and/or imprisonment. Many military members, family members and DoD employees are unaware of this law.

Criminal elements and terrorist organizations place U.S. government identifications as a high value logistical element when planning acts against the U.S. military. Although commercial establishments are not prohibited from asking for military/government identification, many government personnel and commercial establishments are unaware of the prohibition on duplication of government identification. Unfortunately, there are no safeguards in place to ensure a government identification card won’t be counterfeited or “cloned” based on a photocopy by a commercial establishment.

It is recommended that military/DoD personnel provide a state drivers license or other form of photo identification to be photocopied if an establishment insists on a photocopy of the traveler’s identification.

*NOTE: This does not apply to medical establishments (i.e. doctor’s office, hospitals, etc…) who are allowed take a copy for the purpose of filing insurance claims; and other government agencies in the performance of official government business.

Should you witness activity that may be criminal or terrorist in nature, contact the Pentagon Force Protection Agency IMMEDIATELY at 703-692-2729.

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Are you Retired Military? Your Pay Dates Are About to Change

By OJAG Code 16

Paydays for military retirees and those who receive portions of retired pay are changing
for September and December, as the DFAS changes its pay schedule to comply with the
2011 National Defense Authorization Act.

The 2011 NDAA requires military retiree pay to be processed on the first day of the
month. When that day falls on a weekend or national holiday, the pay date is moved to
the previous business day. Thus, the payment original scheduled for October 3, 2011 was
issued on September 30, 2011, and the payment scheduled for January 3, 2012, will be
issued on December 30, 2011.

This change affects regular retired pay, Concurrent Retirement and Disability Pay, and Combat Related Special Compensation. The new rule also applies to retiree allotments, garnishments and court-ordered former spouse and child support payments, but does not affect annuity payments.

Because the 13th payday falls within 2011, some retirees, including recipients of spousal
support, may see an increase in their 2011 tax liability. To avoid paying the increased tax
out-of-pocket, affected individuals should increase the amount the IRS withholds from
their income for the rest of the year. In 2012, the number of payments will return to 12,
and anyone who increased their tax withholding in 2011 should return to their “normal”
withholding amounts at the end of December.

If retirees need to make changes to their federal or state tax withholding, the quickest and
most secure way to do so is through myPay. Customers who cannot access myPay can
change federal withholding amounts by completing a new IRS Form W-4 or W-4P, or
change state withholding amounts using a DD 2866.

These forms can be found on the DFAS website www.dfas.mil/retiredmilitary/forms.html.

The forms either refer to “exemptions” or “allowances.” Although the terminology differs from form to form, decreasing the number means the IRS will withhold more money from each retirement payment.

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Tax Relief for those Impacted by Hurricane/Tropical Storm Irene

By OJAG Code 16

The IRS is in the process of providing tax relief to individual and business taxpayers
impacted by Hurricane/Tropical Storm Irene.

The IRS announced that individuals in Connecticut, Massachusetts, New Hampshire,
New Jersey, New York, North Carolina, Pennsylvania, Vermont, and Puerto Rico are
eligible for limited tax relief, including postponement of filing and payment deadlines.
After the Federal Emergency Management Agency (FEMA) conducts additional damage
assessments, other states may be added to the list.

The tax relief postpones certain tax filing and payment deadlines to October 31, 2011. It
includes corporations and businesses that previously obtained an extension until
September 15, 2011, to file their 2010 returns and individuals and businesses that
received a similar extension until October 17. It also includes the estimated tax payment
for the third quarter of 2011, which would normally be due September 15.

Full details, including the start date for the relief in various locations and information on
how to claim a disaster loss by amending a prior-year tax return, can be found in tax relief
announcements for individual states on the IRS website:
http://www.irs.gov/newsroom/article/0,,id=108362,00.html

The website will be updated regularly with the latest guidance. Additionally, the IRS has determined the following deductions in New Jersey and Vermont:

New Jersey: President Obama has determined that taxpayers in the following counties who sustained uninsured losses attributable to Hurricane Irene beginning may deduct the losses on their 2010 federal income tax returns: Atlantic, Bergen, Cape May, Cumberland, Essex, Morris, Passaic, Salem and Somerset.

Vermont: President Obama has indicated that taxpayers in the following counties who
sustained uninsured losses attributable to Tropical Storm Irene may deduct the losses on
their 2010 returns: Addison, Bennington, Caledonia, Chittenden, Essex, Franklin,
Lamoille, Orange, Orleans, Rutland, Washington, Windham, and Windsor.

This tax relief applies only to federal income tax; check with individual states for
information on state income tax relief.

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Home Affordable Foreclosure Alternatives (HAFA) Program May Make Life Easier for Servicemembers

By OJAG Code 16

Recent changes to the Home Affordable Foreclosure Alternatives (HAFA)
Program make it easier for Servicemembers to qualify. HAFA is a program of
the Departments of the Treasury and Housing and Urban Development that
provides deeds-in-lieu of foreclosure and short sales to eligible homeowners. In
both cases, the amount owed on the mortgage is entirely forgiven, and the
homeowner receives $3,000 in relocation assistance upon closing. To qualify, a
homeowner must:

• live in the home or have lived there in the past 12 months;
• have a documented financial hardship;
• not have purchased a new house within the last 12 months;
• have a first mortgage that is less than $729,750;
• have obtained that mortgage on or before January 1, 2009;
• have a mortgage that is owned or guaranteed by Fannie Mae and Freddie
Mac or serviced by a Home Affordable Modification Program
participating servicer; and
• not have been convicted within the last 10 years of felony larceny, theft,
fraud or forgery, money laundering or tax evasion, in connection with a
mortgage or read estate transaction.

Many banks require financially distressed homeowners to default on their
mortgages before considering a short sale or deed-in-lieu of foreclosure. HAFA
does not require homeowners to actually go into default; instead, homeowners
must simply have a “documented financial hardship.” Previously,
Servicemembers who had not had a decrease in income would not qualify as
having a “documented financial hardship.”

Under HAFA guidance announced on September 29, 2011, a Servicemember who cites permanent change of station
orders as the basis for their financial hardship will now be eligible even if his or
her income has not decreased, so long as the Servicemember does not have
sufficient liquid assets to make his or her monthly mortgage payments. This
change will allow Servicemembers to qualify for a short sale or a deed-in-lieu of
foreclosure without risking their credit scores (and perhaps their security
clearances) by first defaulting on their mortgages.

For more information, please set up an appointment with your local Naval Legal Service Office.

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