Late start of Tax Season - E-File question

[Larmil]

Last season I e-filed 98%+ of my individual tax returns. My office is set up for e-file as default. In fact, I charged extra for paper filing.

With the delay in the start of tax season I expect to be pressured to paper file early returns even tho the IRS will stockpile them.

I wonder what others that have a similar situation plan on doing.

I also expect that I will lose some early filers the those that offer rapid ( and last paycheck) refunds. Any comments?

Also, there was some comment in the House of Reps of passing an extenders bill retroactive (as the AMT bill might also be). Any comments?

[ecb34691]

If nothing is passed, IRS is "ready to roll" as that's the current law. If any AMT patch is passed and signed, then there is a delay per IRS of maybe into early Feb. to change the software. No banks that I'm aware of are offering early "paystub loans" at least not to JH/HRB. IRS has said if people paper file, they will be warehoused and processed much later as they don't have the staff like they used to. Remember, they used to have 10 service centers do 1040's, now they only have 5 and can't handle the extra load.

[JG EA]

I have no idea what to do. I'm waiting for a week or so to see if things will finalize so we can tell people what is happening. Not that I'm going to do another mailing just for this. I think it'll be a mess. Was it bonus depreciation that came late? I didn't have time to think that whole issue through. It was very confusing and then later to find out they had to elect out.

The main trouble I can see is trying to understand whatever they are going to do and the ramifications to be able to tell people just what to expect.

I am also sure I will lose clients. Someone suggested doing RAL's this year to offer, but I decided not to do that to myself. There is already too much to do. Every new thing you read seems to be aimed at causing tax preparers trouble now or down the road.

I can't even tell people whether to prepay state taxes. Maybe they won't pass it this year and will next so wait and double up that deduction next year or prepay in the hopes this will be fixed. (For one's who are now in the AMT and wouldn't be with the patch and it makes not one penny's difference if they prepay or not if there is no patch.)

[JohnH]

Tell them to write the check

For estimated state income tax & property taxes, tell them to write the check but hold onto it. Then they can all call you early in the day on Dec 31 and (hopefully) you can tell them whether to drop it in the mail that day.

Should make for an interesting New Year's Eve day, althought this is beginning to resemble one of two other holidays - Halloween or April Fool's Day - take your pick..

[geekgirldany]

I haven't sent my Christmas cards to customers yet. Maybe that will be a good time to slip an "Oh Yeah btw returns won't be processed until mid February...... Merry Christmas Happy New Year".

Just got this from NATP:
AMT Update

Both the Senate and the House have each passed their versions of an AMT patch. While the Senate version only contains legislation to extend the increased exemption for AMT and the allowance for nonrefundable personal credits, the House version [H.R. 4351] contains more than $50 billion in revenue increases. This fact makes the AMT patch's fate uncertain when the Senate considers the proposal. The White House is threatening to veto the bill.

With that said, it is unlikely the IRS will begin processing tax returns before mid-February. NATP participated in a conference call with the IRS to discuss the upcoming tax season and issues involving this late legislation. The latest news is that the IRS stated that they are looking at a seven week time frame to program their systems once legislation is passed. They have not formally indicated that all tax returns will be delayed, however it is likely that will happen.

[ecb34691]

I hope nothing happens 'cause IRS is ready to roll under current law. Then let the congress answer to the 20 million additional taxpayers next year that get hit with AMT during an election year. They will never be able to explain to the early filers who are "banking" on getting that refund in Jan or very early Feb that they have to wait until March.

[JohnH]

Political Calculation?

In another string I've accused politicians of not being able to plan anything. Now I'll contradict myself.

I'm thinking of which political party will benefit and which will suffer most from each scenario, and whether that may be the deciding factor on when/if this legislation gets passed. On the one hand you have a certain number of taxpayers ticked off over having to pay higher taxes, and on the other hand you have a certain number of taxpayers ticked off over delayed refunds. Interesting question, don't you think?

For my part, I think I'm going to take the advice offered by 'dkss" on the other related string. I'm going to make up a list of phone numbers & email addresses of both Senators and all the congresspersons from my state, regardless of which jersey they wear. Whenever a client complains, I'm going to give them the list and say "Complain to the perpetrators."

[John of PA]

Hold

I plan to hold off on getting the returns to the client until IRS is ready to roll. That gives me a chance to work on the business returns and write-up work. But if the back-up reaches into late Feb. then I would be forced to have the clients start sending them in, as it would be just too big a backlog for my office. I expect more non-sense like this in the future as congress and IRS probably would like to intimidate those who still do many paper returns into Efiling.

[Bucky]

RAL's

Isn't this going to hurt the RAL people also. I thought they needed an acknowledgement back from the IRS before approving or printing checks. If that is the case they will still have to wait. Maybe I'm wrong. I have been once or twice in my life.

[DaveO]

At an IRS liason meeting last Friday

We were told it will be 10 weeks from the date the President signs the bill before the IRS will process paper or electronic returns. The liason officer flatly said that if everyone tries to e-file on that date all their stockpiled returns, it would likely crash the server. In that event the returns may well be "lost" and have to be re-filed.

I see some extensions in my future.

[JoshinNC]

Tax Talk Today

We were told it will be 10 weeks from the date the President signs the bill before the IRS will process paper or electronic returns. The liason officer flatly said that if everyone tries to e-file on that date all their stockpiled returns, it would likely crash the server. In that event the returns may well be "lost" and have to be re-filed.

I see some extensions in my future.

covered this subject on their webcast Tuesday. The lady on the show (supposedly high ranking in the e-filing division) stated that they had gotten the lead time down to 7 weeks by doing some things ahead of time and that an influx of returns would not crash the servers. They have purportedly run some tests of the systems and are not worried about that. My concern would be with the software providers servers, as all us preparers would overload them and they would crash.

[ChEAr$]

more from IRS

They now admit that they can process returns without the AMT. IOW, any returns obviously not subject to it (no form6251, low income, etc) would be processed as normal and efiled
returns possibly subject to amt would be rejected.
He didn't say, but for paper returns I suppose they would process those that qualify and
stockpile those possibly subject to amt.

[fliszt]

Most of my clients

that file early (last wk Jan/first 2 wk Feb) are people that probably would not be affected by AMT. I hope the IRS will process those returns. I efile 99.9% of all clients. I too charge extra for paper filed returns.

[Bees Knees]

that file early (last wk Jan/first 2 wk Feb) are people that probably would not be affected by AMT. I hope the IRS will process those returns. I efile 99.9% of all clients. I too charge extra for paper filed returns.

MFJ, 6 kids, standard deduction. Nothing else.

AMT will kick in at $49,500, unless exemption amounts are extended.

It will affect more people than you think.

49,500 <10,700> <27,200> = 11,600 X 10% = regular tax of $1,160

49,500 <45,000> = 4,500 x 26% = AMT tax of $1,170

[JoshinNC]

Statement directly from head of electronic processing is

They now admit that they can process returns without the AMT. IOW, any returns obviously not subject to it (no form6251, low income, etc) would be processed as normal and efiled
returns possibly subject to amt would be rejected.
He didn't say, but for paper returns I suppose they would process those that qualify and
stockpile those possibly subject to amt.

that if a new bill is passed NO returns, irregardless of AMT probability will be processed until the IRS computers are able to process all returns. I kinda like the idea of nothing being passed and 25 million families shutting down the switchboard on Capital Hill calling their Congressmen asking where their refund is. 95% of my clients have no idea what the AMT is or why we spend so much time doing our CPE during the "off season". A good eye opener for them, I think.