Once again, there may be a delay in the beginning of tax filing, this time for the 2013 tax season. The IRS has stated that the reason for this delay is because Congress has not approved another patch for the Alternative Minimum Tax (AMT). If new legislation isn’t passed to correct this, taxpayers may experience significant delays, because of the time required by the IRS to have their computers reprogrammed.
The Acting Commissioner of the IRS, Steven Miller, sent a letter to Representative Sander Levin, a member of the House Ways and Means Committee, in response to requests made by certain representatives. They wanted to know what the IRS was doing in their preparation for the 2013 tax filing season. The Acting Commissioner’s response focused on two individual issues, both that would result in delays of processing tax returns. The first issue addressed was the required patch for the Alternative Minimum Tax, and the second was regarding the revival of expired tax deductions to be made effective for the 2012 tax year, known as the tax extenders.
The most challenging to taxpayers and the IRS is the AMT patch. Mr. Miller stated that an additional 28 million taxpayers would be ensnared by the AMT for the 2012 tax year than in the previous year. Based on the thresholds reflected in the current law, the 2012 levels would revert to $33,750 for an individual and $ 45,000 for married taxpayers filing a joint return.
With those reduced levels, approximately 33 million taxpayers would be subject to and paying the AMT for 2012, and would not be tax filing until the end of March 2013. If the exemption amounts are not increased, approximately 28 million additional taxpayers will feel the sting of the AMT bite into their wallets, plus the major delay in filing their tax returns.
If the exemption amounts and the ordering rules of any special tax credits are approved before the end of 2012, then there is a strong possibility that there would only be minor delays in the start of the 2013 tax filing season. Mr. Miller further stated that only minimal reprogramming would be required for the AMT patch if it were approved.
If the AMT patch and tax credit ordering rules are allowed to expire, then the IRS would need to notify approximately sixty million taxpayers to advise them that they couldn’t file their tax returns or receive any refunds until the programming changes were made. This tax filing delay could be as late as the end of March because of the complexity and amount of programming required.
On the issue of the tax extenders, the Acting Commissioner stated that if those provisions are included in the new legislation, there could be a delay of about one month in filing. This has happened several times in the past, and as recently as the 2011 tax filing season.
Congress extended various provisions for the 2010 tax year that resulted in a delay of the start of the 2011 tax filing season for approximately 9 million taxpayers. The Acting Commissioner went on to say that because of late enactment of the tax extenders in 2012, there would again be a delay in filing for a substantial number of taxpayers.
He stated that this would be an inconvenience, but would only be a minimal risk to the tax filing season. Back in 2007, the IRS was scrambling at the last minute because of an extension of certain tax deductions that had expired. The extension was approved and signed by the president on December 20, 2006, yet it still resulted in problems with forms that had a Schedule A attached for the 2007 tax filing season.
As of the writing of this article, December 2012, Congress and the President can’t agree on a budget or any of the tax extenders. They haven’t even discussed the AMT patch. Washington is likened to a “ghost town” as far as politicians are concerned. They have all left for Christmas vacation and by the time they return, very few days will be left in this year.
Am I the only one here that can see this broken system and the need to fix it? I admit that I’ve been critical of the IRS on various issues, but in their defense, I would hate to be in their shoes trying to function under these conditions. They constantly have to put out fires started by a group of self serving ego maniacs who frequently act like a group of spoiled children.