(Update: The President signed the Extenders bill last night. H/T Ashlea Ebeling)
With tax season just around the corner, there's good news and there's bad news for taxpayers.
I'll give you the good news first. Despite Congress waiting until the last possible minute (and then some) to pass the tax extenders bill, Internal Revenue Service Commissioner John Koskinen confirmed yesterday that the lag won't add extra delays to the start of tax filing season. The Commissioner could not, however, yet confirm a start date... the tax extenders bill is not the only ball that IRS is juggling on the run up the start of tax season. Noting that in addition to normal testing and reviewing the tax extenders bill (which, it should be noted, as of this posting has still not been signed into law by the President), the IRS has to contend with ensuring that the systems are ready for Foreign Account Tax Compliance Act (FATCA) and Affordable Care Act (ACA). The IRS is, the Commissioner noted, in the "last stages of review" and should be firming up dates shortly. I'll pass along the announcement as soon as it's available.
And no, there's no mistake, that was the good news.
The bad news is that even if the tax season starts on time, the IRS cannot guarantee timely processing of returns. Reading between the lines, that means that there's a real possibility that will result in late refunds. When asked to confirm whether taxpayers should expect a delay in tax refunds, the Commissioner was frank. Stressing staffing concerns related to budget cuts, he could not rule out the possibility, saying "refunds could be delayed."
What makes that likely? The spending bill that Congress just passed - the $1.1 trillion spending bill - made the largest possible whacks at the IRS budget. The $10.9 billion budget reflects another cut to the agency which has seen a 10% decline since 2010. Noting that "close to 75%" of the IRS budget is people, the Commissioner indicated that cuts to the budget necessarily means a reduction in staffing. Since staff is responsible for processing, that will likely mean that the cycle time for processing will be longer. Longer times for processing mean longer wait times for refunds. (I told you it was bad news.)
Final details for the tax season are still being nailed down but expectations are not high. The Commissioner has already conceded that it could be a "miserable" tax season with the Taxpayer Advocate calling it potentially "awful." On the plus side, one has to think that it can't get any worse.
