R&G Brenner has just been informed by our commercial tax software provider, that the IRS has indicated that the 2015 tax season (for filing tax returns for tax year 2014) will be delayed AT LEAST until January 23, 2015. This means the season could potentially be delayed even beyond 1/23.
While delaying the start of the tax season has become a routine occurrence, this tax season could prove to be especially difficult. The recent spending agreement passed by congress and expected to be signed by President Obama, cuts the IRS Budget down to levels not seen since 1998:
It is a cynical recipe for a self-fulfilling disaster: Give the [IRS] more and more work. Cut its budget. Blame it for failing to do its job. Repeat…For context, in 1998, taxpayers filed about 125 million individual returns. Last year, the agency had to process 145 million.
The IRS Commissioner, John Koskinen, pleaded with members of congress to increase the IRS’ budget and to act quickly on deciding to renew or let multiple tax laws and patches expire…all of which fell upon deaf ears. Mr. Koskinen has now dubbed the 2015 tax season “one of the most complicated filing seasons we’ve ever had” The National Taxpayer Advocate was even more forceful, calling this season “misery” & “the worst filing season ever” for taxpayers.
If there was ever a year to have a tax professional on your financial team, this is it! Contact an R&G Brenner professional today and we’ll help you tackle what is shaping up to be a very difficult tax season.
IRS Commissioner John Koskinen recently suggested that the 2015 tax filing season could be misery for taxpayers and IRS employees alike. Between extensive wait times to speak to a representative, implemented laws that have not yet been reflected in the tax code and congressional gridlock, this may be the worst tax season on record.
“The filing season is going to be the worst filing season since I’ve been the National Taxpayer Advocate [in 2001]…” said National Taxpayer advocated Nina Olson. “…I’d love to be proved wrong, but I think it will rival the 1985 filing season when returns disappeared.”
The major obstacles for this year are as follows:
The IRS budget has been slashed. While the House has tried to reduce the budget, the Senate has proposed to increase the budget by $240 Million. Even in the slim chance that it passes, that increase would still amount to a 7% decrease to the IRS’ 2010 budget.
Multiple laws congress has passed, the IRS has yet to implement into its systems. The Affordable Care Act (ACA), The Foreign Account Tax Compliance Act (FACTA) and other laws require information from health care providers and other agencies in order to process tax returns correctly…and that is before the antiquated computer systems of the IRS have to be updated
The uncertainty surrounding “Tax Extenders”; multiple tax laws that either need to be extended, adjusted and/or replaced. There are currently over 50 of them. If these laws are not addressed before December, the tax season itself could be delayed
With all this uncertainty, if there was ever year to have the help of a qualified tax professional, this is it. Contact R&G Brenner today to find out how we can help you. “Saving you time and money is what we’re all about”.
President Obama–through Treasury Secretary Jacob Lew–forced acting IRS commissioner Steven Miller to tender his resignation today following the recent disclosure that the IRS actively and unfairly targeted conservative and Tea Party groups applying for tax exempt status; a gross violation of a government body that is supposed to be above the political fray.
The outrage has now reached a fevered pitch, with the FBI now getting involved with the investigation. While the President and his administration appears to be insulated from the fall out thus far, criminal charges may be forthcoming, with a key person of interest being Lois Lerner who is in charge of the Tax Exempt division of the IRS:
“Lois Lerner lied to me,” said Representative Jim Jordan, Republican of Ohio, who helped initiate the Congressional investigation of the I.R.S.
Ms. Lerner knew of the increased scrutiny given to Tea Party groups since 2010, but told reporters last Friday that she was not aware of any additional scrutiny given to any group and only heard about this through media reports. She along with many other IRS employees are expected to be called in front of congress shortly:
The House Oversight Committee requested five senior I.R.S. officials be made available for interviews by May 20, including the director of rulings and agreements, Holly Paz; a former screening group manager in the exempt-organizations determinations division, John Shafer; and a former advocacy group manager, Joseph Herr.
“Potentially dozens of I.R.S. employees are involved with the original targeting, the failure to correct the problem and the failure to promptly report the truth to Congress and the American people,” said Meghan Snyder, a spokeswoman for Mr. Jordan.
While Mr. Miller–and what is sure to be others–has taken the fall for this scandal, one can’t help but think what involvement if any the previous IRS Commissioner Douglas Shulman had. Mr. Shulman had been commissioner since May 2008, and just recently stepped down last November. He oversaw an aggressive agenda that made some of biggest changes the IRS has seen in decades. While initially lauded, many of these changes have been riddled with delays, errors and met with contempt.
Mr. Shulman was integral in developing and integrating a universal licensing and annual continuing education requirements for professional paid tax preparers. But these requirements were halted by a federal judge right before the 2013 tax season began citing that the IRS did not have the authority to implement these requirements. The IRS appealed part of the decision, but again were overruled. With millions of dollars already spent and industries spawned to provide these paid preparer requirements, it seems like a foregone conclusion that eventually they will go into effect; either by appealing the decision or by going through a body that does have the authority to regulate the industry. Nevertheless, this new scandal will only serve to divert more time & energy away from this project, ultimately leaving the consumer to suffer the most.
Furthermore, Mr. Shulman led the charge in “modernizing” the IRS; particularly the Modernized E-File Program (MeP). With the new MeP, taxpayers would get their refunds in a matter of days, not weeks; all while being kept abreast of their entire filing process with faster updates. The only problem was that it didn’t work. The MeP was put into effect for the 2012 tax season. When it became clear that the MeP was not functioning, it was scrapped, and the IRS was forced to go back to their old E-File program for the remainder of the 2012 tax season. This year (2013) the IRS fully replaced the old program with the MeP, but the tax season was already riddled by delays, due to the last minute fiscal cliff negotiations. At first, the MeP was working as advertised: refunds were being released quicker, and the IRS even claimed you could get updates on refund statuses every 24 hours. But since then its been glitch after glitch, culminating in what has been dubbed the “Education Credit Debacle“, where the IRS allowed hundreds of thousands of tax returns with IRS form 8863 to be filed early causing serious delays. Some of the affected taxpayers could not even get verification that their returns were filed! And the problems haven’t stopped yet. As of the writing of this post, many taxpayers who filed in February & March still have not received their refunds and the IRS is offering no explanation. Last but not least, the new MeP has done next to nothing to combat the explosion of Identity Theft and Fraud that plagued the IRS is recent years.
Once again, it is the hardworking taxpayer that is getting the short end of the stick. If we don’t file our taxes on time, penalties, interest, garnishments, liens, levies, etc. can be and are assessed. But what happens when the IRS does not live up to it’s end of the bargain? As of now, it appears nothing. Supposedly the IRS must pay interest after a certain date if they do not release refunds, but that date is not static. All the IRS has to do (and has done) is send a “document request” like requesting a copy of your W-2s…EVEN THOUGH THE IRS ALREADY HAS ACCESS TO THAT INFORMATION. I have yet to see a taxpayer actually receive interest from the IRS. And the interest rate they supposedly give is far less than what IRS charges us if we are late.
While there is sure to be more to come out from this story, the politicization of it is not good news for anyone. Some politicians have been searching for a scandal ever since Obama took office. So now that they have one, how will it play out to a public so tired of other “scandals”? It’s the “Boy Who Cried Wolf” syndrome. And that is the crux of the problem. While our elected officials have their hearings, while IRS employees start losing their jobs, and the midterm campaign season heats up, average American taxpayers of all stripes, creeds and political affiliations are ultimately the ones that are being ignored.
Do you have an IRS horror story? Share it with us in the comments section.
Acting IRS Commissioner Steven Miller stated recently, that taxpayers will soon start feeling the effects of the Sequester now that the tax season has ended. Deep cuts to IRS Staffing will impact taxpayers calling the IRS, as well as the agency’s ability to combat fraud and collect tax revenues.
Treasury secretary Jacob Lew also chimed in by saying that for every $1 dollar spent on IRS collection activities, $6 dollars are generated. Therefore, cutting back on the ability for the IRS to collect revenues would be short-sighted to say the least. Miller Said:
“Without a change in the current budget environment, the American people will see erosion in our ability to serve them, and the federal government will see fewer receipts from our enforcement efforts…”
Mandatory furloughs for IRS works have already been put into effect as well. While there was early hope that Republicans & Democrats would come together to avoid what many are describing as “self-inflicted” wounds, that prospect has dimmed significantly since we fell off the “fiscal cliff”. Democrats are adamant about including revenues and spending on projects such as infrastructure & early education, while Republicans are standing firm about extracting just cuts. Unfortunately for the G.O.P., this “cuts only” policy is starting to show it’s negative effects on our fragile recovery. With the extreme austerity measures being taken in the E.U., the evidence has shown that it has hampered–not improved–growth.
After two years in which President Obama and Republicans in Congress have fought to a draw over their clashing approaches to job creation and budget deficits, the consensus about the result is clear: Immediate deficit reduction is a drag on full economic recovery.
According to economists, the unemployment rate would be 1 point lower (6.5%) and U.S. economic growth would be almost 2 point higher, had congress not cut spending and did not let the payroll tax cuts for Social Security expire.
Acting IRS commissioner Steven Miller recently sat before a congressional panel and hinted that the best way to combat the explosion of tax fraud may be to either delay the tax filing season, or wait to release all refunds until after the filing season concludes on April 15th.
The reasoning goes something like this: The vast majority of fraud involving income taxes occurs early in the filing season (January & February). Delaying the filing season will reduce fraud because a) It gives the IRS a chance to cross reference filed tax data with what employers are required to send to the IRS and b) There will simply be less time to perpetrate fraud and thus less cases. Looking simply at the black & white numbers, yes this would seem like a good idea. However, like the tax code, this is not a black & white issue. Millions of honest taxpayers file their returns as early as possible because they really need the money. These are usually lower-income taxpayers who depend on their refunds to pay bills, rent, and put food on the table. When you consider the money spent for the holiday season, the urgency for these refunds is magnified. Delaying the start of the filing season could seriously put these taxpayers at risk.
Another proposal involves waiting until after April 15th to issue all refunds. That way every tax return can be reviewed and verified before refunds are released, and would virtually eliminate the majority of fraud cases. However, under current IRS regulations, the government would be required to pay taxpayers interest on their delayed refunds. This cost of combating fraud could outweigh the cost of the fraud itself.
Either way, it is very early to speculate proposed changes and whether or not they will be implemented. Nevertheless, if either of these proposals are ultimately implemented in full or in part, it appears the group that will be affected the most will be the lower income taxpayer.
The Internal Revenue Service has been looking the other way instead of rooting out fraud when people apply for taxpayer identification numbers, Treasury Department investigators said Wednesday, exposing a shortfall with both financial and national security implications.
A member of Congress who sits on the House’s tax-writing committee responded to the report by calling on IRS Commissioner Douglas Shulman to resign, claiming the IRS is helping illegal immigrants defraud the government.
Non-citizens without Social Security numbers have to get ID numbers from the IRS to claim tax refunds. Their applications for ID numbers are processed at an IRS center in Austin, Texas.
J. Russell George, the Treasury Department’s inspector general for tax administration, said investigators looking into the application process found “an environment which discourages employees from detecting fraudulent applications.”
Instead, IRS employees were encouraged to process as many ID applications as possible, George said in his report. In addition, investigators learned that the IRS had quit using successful fraud-detection measures in processing the applications.
“There is a potential that erroneous tax refunds are going to non-qualifying individuals, allowing them to defraud the federal government of billions of dollars,” investigators wrote in the report.
Once ID numbers are obtained fraudulently, they can be used for other deceptions. When first introduced in 1996, the ID numbers were supposed to be used only for taxes. But investigators found they’re now being used in several states to get driver’s licenses.
Almost 3 million tax returns seeking $6.8 billion were filed last year using IRS ID numbers rather than Social Security numbers. Investigators said they couldn’t put a number on how many of those returns may have been fraudulent.
At issue are the documentation requirements for verifying the identity of those who apply for an ID number. Unlike applications for a passport or a Social Security number, applicants for the ID number weren’t required to submit certified copies of their birth certificate or other identification.
IRS managers had been aware of the problem since at least 2002, but failed to take sufficient action, investigators said. Tax examiners at the agency also complained to investigators they had little to no training in how to root out fraudulent applications.
IRS officials responding to the report said they already had taken action to address the problem. In June, the agency started requiring original or certified documents until new rules can be developed for 2013.
“Our leadership moved quickly and aggressively to address issues that were identified,” IRS spokeswoman Michelle Eldridge said.
Treasury investigators said the IRS has agreed to adopt seven of their nine recommendations for correcting the problem and is still considering the other two.
In a letter to Shulman calling for his resignation, Rep. Sam Johnson, R-Texas, cited investigators’ findings that people sought $4.2 billion in refundable child tax credits last year using IRS ID numbers.
“The commissioner and certain IRS officials are essentially aiding and abetting illegal immigrants and others in fraudulently receiving tax refunds courtesy of the American taxpayer,” Johnson said in a statement.
IRS officials declined to comment on Johnson’s letter.