Filing taxes last year was a nightmare for taxpayers, their accountants and the Internal Revenue Service. This year might not be much better.
The IRS is still working to issue guidance for the changes to the tax code signed into law more than two years ago. Congress also passed a series of tax breaks late last year that will require the IRS and tax software providers to revise forms at the last minute, and taxpayers may have to amend returns from prior years to claim those breaks.
It also might be another disappointing year for taxpayers expecting a hefty refund.
“I hold my breath for the entire filing season and breathe a sigh of relief every April 15,” said Robert Kerr, the executive vice president of the National Association of Enrolled Agents, a group that represents tax preparers. “Every filing season is a miracle. The IRS fights an uphill battle every year.”
There are a few bright spots. The agency made it through one filing season with the changes from the 2017 tax overhaul, which greatly revised the tax code for individuals, small businesses and corporations. And unlike last year, the IRS won’t be facing a government shutdown forcing the agency to spend the final weeks of preparation with a bare-bones staff.
Still, tax preparers are bracing themselves for the 2020 filing season, which runs Jan. 27 to April 15.
“I don’t think we know enough or learned enough last year to say this year is going to be substantially easier,” Mike Greenwald, a partner at accounting firm Friedman LLP, said.
Everyone Wants Extensions
For many accountants, the crunch isn’t concentrated just in the spring anymore. The new busy season now includes fall deadlines, reflecting the increased number of people filing on the extension due date to have more time to comply with new complex rules for pass-through entities. Tax professionals are still recovering from last year’s Sept. 15 deadline for partnership returns and Oct. 15 due date for corporate and individual returns.
“Last April was moderately harder than any other tax season,” said Steve Rossman, an accountant at Drucker & Scaccetti. “September was the worst tax season I’ve ever had.”
Accountants say a large portion of their sophisticated clients -- especially those who have stakes in partnerships or invest in hedge funds or private equity -- wait to file until the fall, because they don’t have the information yet from the fund to submit their own taxes.
“They are going to want to wait as long as possible to see if more guidance comes out,” especially rules about write-offs for debt and carried interest, Greenwald said. “They want us to learn on somebody else’s dime.”