Tax Refunds May See Delay

You may see your tax refunds “substantially delayed” in 2015, according to IRS Commissioner John Koskinen. In a letter to Sen. Ron Wyden (D-OR), chairman of the Senate Committee on Finance, Koskinen said that Congress’ failure to address tax “extenders” would have a significant impact on the 2015 tax season. “Extenders” refer to provisions that expired at the end of 2013. Without knowing whether or not Congress will retroactively extend these provisions, the IRS cannot properly prepare forms and software or provide guidance to tax professionals. Koskinen said that if Congress waits until January to address these extenders, millions of taxpayers may need to file amended tax returns. Refunds would be even more greatly delayed.

Another Wrinkle Added with the Affordable Care Act

The Affordable Care Act poses another major challenge this year to the IRS and to tax preparers. 2014 is the first year that the individual mandate is in effect, which means that individuals without minimal essential health coverage have to pay a penalty, collected by the IRS. According to National Association of Tax Professionals spokesperson Cindy Hockenberry, the IRS has been a little not forthcoming in giving guidance that’s needed.

Tax attorney Brad Dorin, a partner at New York City firm Selig & Associates, said consolidation efforts at the IRS have also slowed down the agency.

The American Institute of CPAs’ Director of Tax Advocacy Melissa Labant agreed that IRS seems ill-prepared to deal with all of the questions associated with the Affordable Care Act.

“They now have a dedicated site on IRS.gov to post information, but there are a lot of questions coming in during a relatively short period before filing season,” Labant explained. “They’re trying to address those issues and provide guidance as much as possible … but the IRS has fewer employees and a heavier workload, so they have to do more with less people.” The IRS did not make a spokesperson available for comment on this story.

Here Is What Taxpayers Can Expect

The IRS generally begins accepting tax returns around the third week of January. But if Congress waits until the New Year to act on extenders, Hockenberry said this date could get pushed by a few weeks… dramatically shortening tax season.

Hockenberry said that they couldn’t extend [the deadline] past April 15. This shortened tax season will place more of a strain on accountants and individuals filing their own taxes.

Once Congress decides which provisions will be extended, taxpayers will need to scramble to find receipts in order to take the deductions available to them. Some of the provisions that could be extended include credits for energy-efficient home improvements, a tuition and educational fees credit and a deduction for teaching-related expenses. All in all, there are 57 provisions that expired at the end of 2013, Hockenberry said. The experts say simply that individuals shouldn’t count on a tax refund early in the New Year.