In my situation I do not see the beginning of the upcoming tax filing season as being delayed. I am not one of the “return preparers who depend on income coming in during January” that Trish mentions. For me the tax season officially begins on February 1st – and this season will be no different. I will not prepare a tax return in January unless I, not the client, absolutely, positively, beyond any doubt believe that all the necessary information has been received by the client.
I have seen too many cases over the years where a taxpayer mails his finished return to “Sam” in late January or on February 1st or 2nd, only to receive an additional Form 1099 or W-2 on February 3rd.
What will happen this tax season is that taxpayers requesting a refund will have to wait much longer than usual, or what should be necessary, to get their check. And the fault lies not with the IRS but with the cafones in Congress. This is because they have failed to enact an AMT fix that, in theory at least, both parties, and George W as well, are wholeheartedly in favor of. While a fix has passed the House nothing will be done in the Senate until next year!
The IRS estimates that it will take 7 to 10 weeks after the law is finally passed to make the appropriate corrections to their computer system. Because the dreaded AMT could affect so many 1040s, the Service is considering pushing back the date that it will begin to process returns, currently scheduled for January 14th.
I anticipate that if the Congress is going to act they will do so by February 1st - so I will know what is what when I begin my 2007 Form 1040s, and should not have to hold off preparing returns that could fall victim to the dreaded AMT.
Last year Congress waited until the last minute to extend some popular tax breaks, which caused delays in processing the returns of taxpayers who claimed such breaks - but this year's delay will affect all returns.
Whatever you do – do not use this as an excuse to put off getting your 2007 tax “stuff” to your tax professional! The longer you wait to turn over your information to your preparer, the more backed up he/she will become. This will only add to the IRS delays and it will be even longer before you finally get any refund check to which you are entitled.
To add insult to injury, Trish reports, “$1 million- that is what I heard was the cost of last year's delay. This year's delay will cost the IRS at least that, if not more.” I would expect much more.
Another downside of the delay in processing refunds is that it gives H+R Block and others of that ilk an added opportunity to push Refund Anticipation Loans (RALs) on low income taxpayers – happily filling their coffers by taking advantage of those who can least afford these usurious arrangements.
I would like each and every taxpayer to write a letter to their Congress-persons and complain about their irresponsible behavior in this situation. I will be posting a copy of my letter here shortly.
BTW, you can find out what has been keeping me from finishing my tax work in today’s posting at ANYTHING BUT TAXES!
And finally, thanks and a tip of the hat to the internet’s TAX GURU for introducing me the above political cartoon.