New Year’s Day has long been a work day for me. All the procrastination has ended and I have to get everything printed, mailed, collated and cleaned for tax season. But this year, we have the fiscal cliff. Still! And that will impact the tax season.
Right now we have a tax (and other things) bill in the House, The American Taxpayer Relief Act of 2012 (ATRA). The Senate stayed up until the wee hours of the morning to pass their bill. But the House doesn’t like the bill because of the lack of spending cuts and there is a good chance that they will not pass the bill as it stands. They could make changes and punt it to the Senate. That happens all the time. But there’s a catch right now.
The 112th Congress ends at noon on Thursday January 3, 2013. That’s the law. And when the 112th Congress ends, the American Taxpayer Relief Act of 2012 dies. The 113rd Congress will have to start all over on tax relief once they’re sworn in.
On November 13th, the acting IRS Commission sent a letter to Congress stressing the importance of dealing with the AMT patch and the tax extenders ASAP so that the 2012 return filing would not be delayed. While most of the attention was on the 2 month or more month delay which would be caused by the failure to pass an AMT patch, Mr. Miller also pointed out in that letter that the tax extenders could cause a delay. He pointed to 2011 when the 2010 returns for 9 million taxpayers were delayed for a month so that the IRS computers and forms could be changed to account for last minute legislation. So even if the House passes the bill before them now, a large portion of taxpayers will have to wait to file.
The prospects are worse if the House doesn’t pass this bill by noon on Thursday. The new Congress will have to start the legislative process over. The IRS can’t wait long to see if they can quickly work out a deal. They will have to start the re-programing process and we could see an across the board filing delay until at least March. (A frightening thought. ATRA doesn’t pass the house and dies at noon Thursday. Then IRS starts making the changes needed by the loss of extenders and no AMT patch. The after a few weeks work, Congress fixes those issues retroactively and now the IRS has to start the update process all over again. And delaying filing even later. Like I said, frightening!)
The best bet for most taxpayers is for the House to pass ATRA and work on the needed spending cuts next year. But what will happen? I don’t know about the law but I do know that at least some taxpayers won’t be able to file until later than usual no matter what happens to ATRA in the next day and a half.