2013 TAX FILING SEASON DELAYS

[Guest Taxed]

Just read about a letter the IRS commissioner sent to congress last week.

IRS Warns Congress Tax Season Might Be Delayed until March or Later without AMT Patch

I was getting ready to mail out the tax organizers after Christmas as I do each year but this year I may wait until January to see what happens?

What are you all doing to keep your clients informed?

[kcjenkins]

Praying?

[JohnH]

I'm telling them to read the newspaper if they want to stay informed - that's what I'm doing.

[tetspa]

Possible scenarios and their probable impact (in my opinion):

Scenario 1: Lucky unaffected (i.e. returns with AGI below a "magic number" or returns without affected credits/deductions) can be e-filed on opening day, rest will have to wait until Feb or March. Result is some of your workload "shifts" from earlier in the season to March. Impacted clients complain, but nothing you can do.

Scenario 2: All returns can be e-filed on opening day, but "affected" returns be essentially "over-taxed" and thus will need to be amended to "get back" the overage (or clients could just wait until the patches are programmed into the IRS). Result is a lot of amended returns which you would probably schedule after Apr 15. Whether to charge extra for the amended returns would be up to you.

Scenario 3: EVERYBODY is delayed until February start date. Result is a TON of people flooding the system on opening day and probably lots of IRS crashes and delays (worse than last year's MEF crash and burn). Result is a dead January, and an over-loaded February. Walk-in clients will experience longer waits and may (depending on your type of client base) decide to "go elsewhere where there isn't as much of a wait".

The chains will downplay the delays until after the returns are filed (and the clients are past the point-of-no-return, revenue-wise). If your clients are loyal to you, are mostly by pre-arranged appointments, and are willing to tolerate a bit longer-than-unusual wait times, you should be fine. If your client base is more retail walk-in (and thus more "fluid") you may lose business under Scenario 3 to an upstart independent with nobody waiting. The chains will just have a warm body at every desk, so they are probably not as afraid of Scenario 3 as I would be.

NOW, depending on your software, and how "pro-active" it is at programming (in other words, will your software be ready with the "probable" fixes ahead-of-time) you could theoretically prepare returns, print 8879's, have clients sign and walk out the door with the understanding that the reutrns are still on "hold" pending final approval of forms for the IRS, then when the IRS publishes the final forms, "error-check" each of the "pre-updated returns" for any changes, then transmit those without changes and call everybody else to come back to "re-sign" the new 8879's. You could mitigate the shifted workflow somewhat...IF your software developer is proactive enough.

Bottom line is going to be more work. The big question is do you increase fees to compensate for the extra hours (or extra manpower) to handle it?

NOW, my opinion is that the most likely scenario is #1, and also that is the easiest for me to deal with. I haven't made a decision yet as to the possible fee increase and I probably won't decide until I know for sure what will happen.

[Guest Taxed]

My partner and I have decided that we will wait until the first week of January when Congress returns and see what happens. I do not like scenario 2 or 3 because it causes anxiety and i can't possibly charge my loyal clients for amendments that is not their fault. i will have to eat that cost!

We are planning on mailing out our client tax organizers early January and will include a note for our clients. If the tax season start is delayed then in my opinion the stop date in April would have to extended by a same amount. The issue is vacations after tax season! My partner is already booked on a cruise in May!!

[joanmcq]

I've been warning my clients since they came in last year. I told them I'm prescient, did my best Karnak impersonation, and told them that with the election year, the history of delays, political wrangling and just plain crap that happens every year, I'd do my best to work up projections, but all bets were off as to what the tax code will be, when or if any extensions, renewals, revocations, patches, etc will be done is completely unknown. I've been betting on March as the start of the filing season.

If it starts earlier, and I can file earlier they'll be ecstatic, and I look like a superhero.

[Guest Taxed]

Today I sorted my database of clients who normally come late Jan and early Feb in the past 2 filing seasons. I think I will drop them a postcard in January if IRS announces any delay. Most of these people are EITC cases and I can see the hardship they will face should it get pushed back to March. Christmas bills will be coming due late Jan/Feb.

[mcb39]

One of the problems with this world. People have to learn not to spend what they don't have. I doubt the EICs will ever learn that, but I wish they would not look at it as a "given" and spend it sensibly when they get it.

[jainen]

>> Impacted clients complain, but nothing you can do.<<

Oh, there is PLENTY that a tax professional can do! Start by getting a genuine news subscription like Checkpoint, so you have perspective on all the rumors and estimates and predictions your clients are hearing. John, I know you were just being sarcastic about the newspaper!

Although we'll probably have more late nights in February/March, I don't expect our total processing time or office costs will increase significantly. Fees are usually based on the complexity of the return, which might well decrease if credits and deductions are not extended. At least Form 1099-B is going to be easier and faster in most cases. EIC seems like more because of the due diligence, but that's really only a problem for the big chains with untrained preparers. Your fees are probably already competitive there. Of course if AMT is not patched many clients will indeed have a more complex return. But I expect it to get fixed eventually so meanwhile I'll probably not charge my loyals extra.

Overall I'm pretty relaxed about waiting until January 21 for my update class.

[BulldogTom]

Overall I'm pretty relaxed about waiting until January 21 for my update class.

Where are you going for your update? I am going with Spidell again. Pretty much use them every year. Wish I would have known earlier (before I ordered my class on the 10th) and we could have met up at a seminar. Maybe next year (or maybe you don't want to meet up - you might prefer to stay a name on the board - which is ok as well).

Anyone going to Spidell in San Ramon on the 10th? We can meet up and sit together at lunch if you wish.

Tom

Hollister, CA

[JohnH]

No, I wasn't kidding about the newspaper. Right now I'm in India anyhow, so except for this forum and Drudge report, my clients really can get their info from the newspaper. And that really is what I told those who called before I left.

Personally I don't care when the filing period starts. I can't change it and I don't accept any responsibility for the politicians' stupid failure to complete their basic respoonsibilities. Extensions are fine with me - I may set the cutoff date as March 1 this year.

I don't see where there's a big deal because if a client's return has an issue which might change due to Congressional action (wow, that's a contradiction in terms) we need to extend. If a client just MUST file before all the dust settles, they will have to agree to pay me for any amended return which has to be prepared.

[MAMalody]

Hey, what are you doing in India? Checking up on tech support:>)

[JohnH]

Mission trip. But while I'm here I could probably check on tech support for my credit card, newspaper, all my appliances, and most of the software I use. (At least during the brief time I'm in the city)

[MAMalody]

Cool. Careful, I understand there is some resistance to overt missionary work.

[JohnH]

Yes, this is my fifth trip and you are correct. Thank you for the reminder. Much depends upon where you find yourself at a given time. We did have something similar to an Acts 9:25 experience on one trip, which has caused us to use even more caution in a number of ways.

[Lion EA]

Oh my, lowering you in a basket through a hole in the wall?!

[JohnH]

Close - having to leave at midnight on 30-min notice due to learning about some unwanted negative attention we were about to get the next morning. Certainly makes one appreciate the freedoms we take for granted in the US. Also validated the wisdom of "living out of your suitcase" when abroad.

[Lion EA]

My daughter convinced me to go along with her on Appalachia Service Project this past summer. We were in VA, so the worst we had was 106 degree heat. For the most part, we were welcomed. You are brave.

[JohnH]

Thanks for the thought, but for me bravery has little to do with it.

It's all about trust & obedience.

The whole world is a mission field, regardless of whether it's local or halfway around the globe

[Gail in Virginia]

JohnH, I have a cousin in India doing a year-long service project teaching women to make a living sewing and working with textiles (or something like that). Not sure what part of India, though.

Lion, I live in Virginia, near the Blue Ridge Mountains. Curious what part of Virginia you were in this summer.

[Lion EA]

Dickenson County, VA. We stayed on the floors of Haysi High School in Haysi, VA. My worksite was the farthest away in Clintwood, VA. Our group of nearly 150 adults and teens went to five centers in VA, WV, and NC. In other years, they have been in other states along the southern Appalachian Mountains. The other VA center was in Washington County, VA. Well, ASP has lots of centers, but that was the other VA county where I knew the workers. All five of our groups met up on the way home, so we got to hear about all five of the centers and the many work sites where our groups worked.

[jainen]

>>going with Spidell again<<

Absolutely no other choice for California preparers! I just finished their 2-credit Ethics course (a full 8 hours before the deadline). It was quite informative about the proposed regs changing Circular 230. In an amazing show of common sense, IRS slashed Section 10.35 (rules about giving tax advice) by 99%. "A practitioner must possess the necessary competence to engage in practice before the Internal Revenue Service. Competent practice requires the knowledge, skill, thoroughness, and preparation necessary for the matter for which the practitioner is engaged." Period.

[Gail in Virginia]

Dickenson County, VA. We stayed on the floors of Haysi High School in Haysi, VA. My worksite was the farthest away in Clintwood, VA. Our group of nearly 150 adults and teens went to five centers in VA, WV, and NC. In other years, they have been in other states along the southern Appalachian Mountains. The other VA center was in Washington County, VA. Well, ASP has lots of centers, but that was the other VA county where I knew the workers. All five of our groups met up on the way home, so we got to hear about all five of the centers and the many work sites where our groups worked.

That is a bit further west than I am located. But if you come back to Virginia again, let me know and perhaps we can get together somehow!

[Lion EA]

Will do. Probably the week containing July Fourth. If my center is in VA and not another state. You can stop by and be our guest hammer-er or driller or go out for ice cream after dinner!