There is less than a week to go before the tax filing season opens on January 20th. We already have a lot of individuals and businesses reaching out to us about getting the preparation process started. The IRS Commissioner John Koskinen recently advised that “realistically we have no choice but to do less with less” due to the recent budget cuts. The IRS is understaffed and that can have a variety of impacts on this tax season.
Thiswill especially be true for taxpayers that elect to paper file their return. Our firm requires electronic filing unless there is a section of the return that prevents it. The Commissioner estimates it could take an additional week or longer for refunds to be processed.
Increased Wait Time on Telephone Inquiries
While telephone calls were never answered quickly before, there will be an even longer wait time. During high volume call times taxpayers may be asked to call back later and that their phone call cannot be answered.
Delayed IRS Correspondence
We have seen this recently with current clients, but the IRS needs additional time to process requests on appeals and other items due to low staffing. This can result in unresolved tax issues dragging out for months at a time. However, it is important to keep current with the status of any IRS requests to make sure an extension of time either for the taxpayer or the IRS is in place.
While this is unlikely to happen during the January to April tax season the IRS is planning for at minimum one shutdown this year.
Decreased Audit Resolutions
For existing audits this means that less will be resolved this year. There is no official comment on new audits, but it is reasonable to assume that with less staff there will be fewer audits in 2015.
While the above issues are prevalent in most tax seasons, this year is predicted to be worse. We are recommending now more than ever getting in early to file.