For Americans who couldn’t figure out how to pay their taxes in April after Republicans overhauled the tax code, there is a new day of dread for accountants: Oct. 15.
That’s the filing deadline for individuals and corporations that asked the Internal Revenue Service for a six-month extension to submit their tax documents. Accountants say they’ve seen a surge in clients needing extra time to finish filings for their 2018 income, the first year subject to new rates and regulations following the 2017 tax law.
About 15 million individual taxpayers filed for an extension this year, according to the IRS, compared with about 10 million people in previous years.
The new law included several provisions that made it more complicated and time-consuming to file tax returns, and in some cases more difficult to claim valuable tax breaks.
A change in how the IRS calculates and taxes corporate offshore income has been a challenge for tax preparers, as has a new 20% deduction for pass-through businesses that meet a long list of requirements, accountants said.
Ed Reitmeyer, the Mid-Atlantic regional partner-in-charge at accounting firm Marcum LLP, said he emailed his staff in late July and September to warn that their workload will increase by about 20% in what is already a relatively busy season to meet the Oct. 15 deadline.
“There is some significant overtime,” he said.
Accountants have a new problem this year because they don’t know how to compute key portions of the code. The IRS still hasn’t written implementing regulations for some provisions, and some mistakes that Congress wrote into the law haven’t yet been corrected.
“It’s as or more complex as it was before,” said Mathew Talcoff, a partner in Boston at accounting firm RSM. “We thought we were simplifying things.”
Mistakes Abound