FILING SEASON CONCERNS CREEP BACK: Yet another alarm bell has sounded on a possible delay in the upcoming tax filing season. IRS employees have begun voicing concerns through their union that the agency is ill-prepared, given the lack of training they've had to date on tax law changes that took effect this year that are certain to prompt a host of taxpayer inquiries, as yours truly reports. "Many are saying that training on the new tax law is completely inadequate," National Treasury Employees Union National President Tony Reardon told me. Preparing employees for taxpayer assistance duties should be happening now for the filing season to begin in January as usual, he said, blaming the current problem in large part on lack of sufficient funding from Congress.
Reardon's worry echoes an earlier warning that the filing season could face delays for another reason: IRS information technology systems might not be ready to start on time because the agency's IT group hasn't received all the material it needs to make system changes, according to examination results released in September by the Treasury Inspector General for Tax Administration. IRS business units typically supply that information by Jan. 31 in a given year for the next year's filing season, but because the new law was signed at the end of last year, the IT organization set out several later deadlines well beyond Jan. 31 to allow for timely implementation of new law's tax provisions, which TIGTA found haven't been met.
"I have no doubt that it is going to take a major effort to make sure the IRS's current information systems can handle the job," said Floyd Williams, who for 16 years was the IRS director of legislative affairs. Yet because the administration so glowingly touts the new law, H.R. 1, an round-the-clock effort is likely to get underway to ensure filing season starts on time, Williams told Morning Tax.
The IRS has answers. A statement responding to the union concerns said the IRS "has been extremely focused on building the necessary infrastructure and training materials for our employees. Critical training has already been conducted and more is scheduled before filing season starts." In addition, the agency is "well on our way" to creating or revising hundreds of forms, instructions, and publications to implement tax reform provisions, the statement said. "We have not yet announced the official start date of filing season, which we typically do later in the year, but we will be ready to help taxpayers understand changes affecting the upcoming tax season," the statement said.
Delayed filing seasons aren't unprecedented — Williams recounted a handful of times that it started late by a week or more during his time at the agency. Late-year bills are often to blame — think extenders. "The IRS has been through this drill many, many times with Congress passing last-minute legislation," said Karen Hawkins, chair of the American Bar Association's tax section. It's rare when no problems crop up during the year, according to Williams.
So what does it all mean? Well, taxpayers shouldn't expect the IRS to delay the usual due date on or about April 15 for filing tax returns (April 15 falling on a Sunday or holiday can affect the deadline). They can file for an extension if needed. Besides, moving that deadline would be extraordinary, said Williams, who's now at Public Strategies Washington Inc. Doing so would invite the wrath of Republicans in Congress, which new IRS Commissioner Chuck Rettig would surely want to avoid, Hawkins told Morning Tax. She's not surprised "the very change-resistant IRS employees" have anxiety about being unprepared for filing season, but Williams predicted the IRS would muddle through filing season and declare success.
House Democrats are moving forward with reconciliation legislation to provide $1.9 trillion in Covid relief, with a floor vote expected late next week. In the Senate, Democrats have adopted new caucus rules that have resulted in numerous changes in subcommittee leadership, particularly at the Appropriations Committee.Read More