Today is the due date for returns under extension. Taxpayers can still file returns but they lose the protection the extension gave them.
This is also the last day a return can be e-filed. This is very disappointing. I had hoped that with most returns transmitted under modernized e-file (MeF) we would get year around filing this year. But it’s not to be. A return not transmitted today will have to be mailed.
So, now is the time to look forward to tax season 2013. The date that is showing up in tax forums and boards as the first date we can e-file is January 22, 2013. That’s the day after Martin Luther King’s holiday. The same day as last year’s start. That is 98 days from today according to my program. The question is; will we actually be able to file then? The problem is Congress.
According to a report from the Joint Committee on Taxation, JCX 1-12, there are 101 tax provisions which expired in 2011 or will expire in 2012. And another 8 tax provisions relating to disaster relief for the 2 years will expire. While it’s doubtful that all of the provisions will be extended, some of them will but not until Congress gets back to work after the election.
And then we’ll have to wait while they argue and point fingers before seeing any new laws. Once we have new tax provisions, the IRS needs to work them into the tax returns, create instructions and worksheets, distribute that info to tax software companies and print new forms. The longer Congress takes to deal with the expiring provisions, the less likely tax season will start on time.
We’ve had this problem before. In 2009, the expiring tax provisions were not extended until December. There were 2009 tax year returns which couldn’t be filed until February 15, 2010 because the IRS needed time to implement changes.
Delaying the start of the tax season, even for part of the tax returns, impacts on clients needing their refund and preparers who need early season income. The biggest problem right now is that we can’t do much tax planning. Tax rates, the amount of credits, Alternative Minimum Tax, the estate tax, bonus depreciation and many more tax provisions are up in the air. That makes it very hard to advise clients.
We’ll see what happens next month. Will we be able to file
in 98 days or will the start of the tax season be delayed?