IRS changes may not mean a taxing time
Recent changes in the tax law delaying filing of individual tax returns with itemized deductions are affecting local tax preparation services as well as their clients.
CPA Robert Clausing, of the Lansing accounting firm of Robert Clausing & Associates, said the delay would be at best, “an inconvenience.”
“We will obviously not be able to file the returns as early as we like,” Clausing said. “We’ll have to hold on to the forms until the government programs are ready to handle them for electronic filing.”
The holdup stems from Congress’ passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 on Dec. 17. The law extends several tax deductions for millions of taxpayers and has forced the Internal Revenue Service to reprogram its computers to handle them. The work is expected to take until mid-February, but it could be even a few weeks later.
Clausing, whose small firm handles tax returns for 300 to 400 clients, said the extent of the problem the delay will cause depends on how long it takes for the IRS computers to be reprogrammed.
“The bulk of my clients itemize, ” he said. “If it’s in mid-February, it won’t be too bad. If it’s later than that it could cause some major headaches.”
However, Clausing said the delay in filing individual tax returns will give his firm a chance to complete the tax returns of businesses and corporations, which aren’t affected by the recent changes in the tax code. The changes involving the state and local sales tax deduction, the higher education tuition and fees deduction and the educator expenses deduction as well as those taxpayers who itemize deductions on Form 1040 Schedule A.
Sharon Percy, office manager of Precise Accounting and Tax Service of Hammond, said the firm has about 2,000 clients and the majority of those who usually file their tax returns as early as possible shouldn’t be affected by the delay.
“The people that come in early generally have the more simple returns and don‘t itemize their deductions,” she said. “The more complex ones don’t usually come in until March.
“If they do come in early, they’ll have to wait until the IRS is ready to accept their returns. I don’t expect it to cause a really huge problem for us.”
But Misty Akers, office manager for an independently-owned Schererville branch of Jackson Hewitt, Tax Service Inc., said the delay could have a significant impact on its business.
“Overall, it’s hard to anticipate what’s going to happen,” she said. “It could hurt our business. We don’t want to lose clients because of what IRS has done, but we offer tax Refund Anticipation Loans and if people can’t file for a refund right away, it may encourage them to go somewhere else.”
Through the Refund Anticipation Loans, Jackson Hewitt clients can get a loan of up to $1,500 against their refunds. Although early filers won’t be able to file any sooner with a different tax preparer, Akers said once clients leave without filing for a refund they normally don’t return.
“In our experience, we’ve learned if there’s something to delay their refund, they go somewhere else.”