Imagine that, the government dallying to get money from taxpayers. But that was exactly what happened recently when the IRS disallowed filing until January 30. The reason? The late passage of the much-maligned American Taxpayer Relief Act, better known on the Beltway as the fiscal-cliff tax bill.
The delay obligated the IRS to scrap its forms and release new ones. This delay also caused the IRS to scramble so its computer system would work properly with the changes that came with the new forms and would prevent it from coughing up errors down the line. The computer config involved several software houses cobbling together new computer code to get everything working properly by January 30.
Significantly, the pushed-back filing date backed up the client queues of CPAs, tax preparers, and other tax professionals. According to Isaac O’Bannon, writing for cpapracticeadvisor.com, those handling bulk client returns were the most affected. But enrolled agents suffered, too.
Bryan Adams, an enrolled agent from Pleasantville, New Jersey told O’Bannon that he had to extend his working hours to cope with the workload. Workdays from 7 AM to 11 PM were not uncommon at the height of the compressed tax season. Not all were able to scramble fast enough. Adams’ company, for one, was only able to complete 100 returns by the end of January, when they would have completed 600 under normal conditions.
The situation has been very frustrating—and, not just for the tax preparers. Taxpayers, especially those under financial duress and need to have their tax refunds as soon as the system would allow, are understandably non-too-pleased. Adams estimated that some 80 percent of their clients desperately need their refunds.
The IRS is aware of that frustration only too well. Its website is so besieged with inquiries about refunds that it was recently forced to issue an urgent request for taxpayers to limit their visits to the site to just one a day. It explained that the site is updated just once a day, so checking the status of a refund every five minutes is pointless and serves only to possibly overload the bureau’s server and cause further delay. The IRS advised concerned taxpayers that the best time to check is at night and also on weekends.
The IRS reminded the public that 90 percent of taxpayers normally get their refunds within 21 days (many in less time) of submission of return online and get the refunds directly deposited into their bank accounts.