Why the long delay?

[Roland Slugg]

As everyone knows by now the IRS has announced that it won't be able to process paper or e-filed returns containing Schedule A until mid to late February. The reason? ... all those complicated and unexpected changes to the tax law enacted by Congress in December.

Well, what were those changes? Let's see ... all the tax rate brackets were left the same except for the tiny increases announced a year ago. (In 2010 the 15% bracket went up $50 for singles and $100 for MFJ.) The personal/dependent exemption amounts are unchanged. The tax rates on qualified dividends and LTCGs remain the same. So what's the problem? Since the IRS is pointing to Schedule A (Form 1040) as the main form responsible for the delay, let's look at it.

Uhhh, there was the ....
And the new ....
Oh, and don't forget the ....

Hmmm. I can't think of a single change affecting Schedule A.

Oh, the itemized deduction phaseout for "high income" taxpayers is now fully restored, but this was planned for three years.

Consider this simple fact: Except for a few "extenders" that continued or restored certain expiring credits retroactive to all of 2010, all the newly enacted changes affect returns that will be filed for the years 2011 and 2012.

As for changes affecting 2010 returns, I'm sure that the smarter of my two pet cats could reprogram the IRS computers in five minutes.

[Snaggletooth]

Schedule A

I hadn't thought of this Sluggo, but you are exactly right. There should be literally ZERO reprogramming or reprocessing for last-minute legislative changes attributable to Schedule A or ANY of the line items therein. The changes really had more to do with tax rates, adjustments, 2011 withholding, and credits than deductions on Sch A.

I'm not in possession of all the facts, but I doubt the government is being very straightforward with us (imagine that). I can think of a reason that may be more believable.

The information flowing from IRS sources for years has been telling us that the heavy processing during the season comes early and late, e.g. peaks between Jan 25 and Feb 15 then tapers off. Then peaks again after March 15. What better way to smooth out the operation than to deny a large percentage of filers the opportunity to file before Feb 15th?

If this is the REAL reason behind this devious action, there is a social element involved as well. Most of the EIC crowd is not affected. Those fortunate enough to own a home, to make charitable contributions, etc. are delayed from filing. And for those expecting a refund, if they can forego deducting these things, they can file earlier and the govt gets more revenue.

I will also guarantee that the perception left in the minds of the public is that this breakdown is for this year ONLY and will not be repeated in the future. If my suspicion is true, however, look for a gimmick every year to serve the govts processing or social needs. This will backfire on the govt if millions of taxpayers file without Sch A and then file amended returns.

[DonPriebe]

... There should be literally ZERO reprogramming or reprocessing for last-minute legislative changes attributable to Schedule A or ANY of the line items therein. ...

Disagree. For example, as of December 16 you could not deduct sales tax in lieu of income tax on your Schedule A for TY 2010. On December 17 you could. True, the IRS could have left their software in the 2009 configuration where the sales tax was deductible, but then they still would have had to change it if the new law were not passed. The only way for the IRS to have had their software ready on time is if they correctly guessed what congress was going to do. And I think that's above their pay grade.

[Dusty2004]

I agree with Don

The IRS had to get ready for the tax season with the law as it stood at the time they were programming it.

It might seem easy to say "just go back to last years program" but that is not easy and there are many things that have changed - like no "tax free" unemployment, etc.

Dusty

[Jiggers]

I bet our tax software has it fixed quick

The IRS had to get ready for the tax season with the law as it stood at the time they were programming it.

It might seem easy to say "just go back to last years program" but that is not easy and there are many things that have changed - like no "tax free" unemployment, etc.

Dusty

I would bet that our tax software, no matter which company, will have the new tax law implemented and ready to run tax returns in about a week.

[Bees Knees]

And why should IRS bend over backwords to get everything done on time? Updating software, or updating forms, or updating their instructions and other printed material takes time. IRS told Congress they needed time to update stuff. It is Congress who took too much time. Blame them, not IRS.

I think IRS should extend the filing season with a May 15th deadline.

[Snaggletoof]

Tack It On

I don't have any problem with tacking on extra filing time, in fact, I would like to see one day added for every day beyond November 30th that Congress tampers with the tax law. In particular, those of us who watched this circus during December know that their effort was 95% grandstanding and 5% real work.

The IRS takes the heat (along with the rest of us) for congressional stumbling and bumbling while our congressmen seem to get a free pass.

However, this doesn't take pressure off the IRS if they still want to get started on Jan 14th. The above proposal tacks on the time to END of the filing season and the pressure is still on the front end. And that takes us back to the original post -- of all the various changes that occurred, almost none of them involved the Schedule A, yet the IRS is using Schedule A as an excuse.

We can extend this thinking to tack on one day to the BEGINNING of filing season for every day Congress acts beyond November 30th. If this were to occur this year, the EIC crowd wouldn't get their money until after the first of March. THEN congress would feel the heat. Instead of smiling on TV there would be weeping and gnashing of teeth.

[Edward]

I noted that on the IRS opening page they have a new version of the form 1040. Lines 23 and 34; line 40b is out as there is no longer a sch L; and with other small changes. However our software hasen't updated as yet. Maybe IRS is withholding because of other possible changes?

[LCP]

And why should IRS bend over backwords to get everything done on time? Updating software, or updating forms, or updating their instructions and other printed material takes time. IRS told Congress they needed time to update stuff. It is Congress who took too much time. Blame them, not IRS.

I think IRS should extend the filing season with a May 15th deadline.

Bend over backwards ????

How about plan ahead and then operate efficiently........ is that too much to ask of a government agency?

[taxxcpa]

Plan ahead

Bend over backwards ????

How about plan ahead and then operate efficiently........ is that too much to ask of a government agency?

THIMK AND PLAN AHEAd

The should come up with Plan A and Plan B with guesses as to what extenders will be enacted.

[thomtax]

Bend over backwards ????

How about plan ahead and then operate efficiently........ is that too much to ask of a government agency?

Yes - it obviously is.

[outwest]

So which of these choices would you have the IRS make?

Remembering the old programmer's adage:
1. Quality of Code,
2. Speed of Implementation,
3. Low Cost;

choose two...

Oh yeah, #3 is already set by the budget; only #1 or #2 can change, which would you prefer?

BTW, I've often thought the same three apply to tax prep as well...

[joanmcq]

The sales tax deduction extension changed the Sch A, as well as removing the limitation on itemized deductions for high income filers. A few things were not extended that MIGHT have been that are on Sch A are: casualty loss tweaks, the RE tax deduction for non-itemizers, the new vehicle sales tax deduction, etc. The big one was probably the limitation. The programmers may just be trying to fix the things that are the easiest (I'm sure they have an AMT patch ready for each year by now) and thought the Sch A changes were either the least likely to be passed, or were just at the bottom of the pile of fixes.

There is a Sch L per my update class; it just won't be used except in a very few instances.

[Bees Knees]

How about plan ahead and then operate efficiently........ is that too much to ask of a government agency?

Well OK, lets plan ahead.

Anyone paying attention knew a zillion things were set to expire.

So lets make two plans.

1) The zillion things are extended.

2) The zillion things are not extended.

The problem is, neither 1) nor 2) became reality. 85% of those zillion things were extended. 15% of those zillion things were not. Plus, a zillion new things out of the blue were added. Thus, neither plan ahead would have worked, unless you have a crystal ball and can see into the future to know what the new law would actually be.