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Tax Prep Chains Cope with IRS Tax Season Delay

By Michael Cohn
January 9, 2013

The big national tax prep chains reacted to the Internal Revenue Service’s announcement that tax season would be delayed until the end of the month with a mixture of statements ranging from acceptance to resignation to the equivalent of “I told you so.”

The IRS said Tuesday that the start of tax season for individual returns would be postponed until January 30, with some tax returns unable to be processed until late February or March (see IRS Delays Tax Season until End of January).

The biggest tax chain, H&R Block, noted that the January 30 start for processing federal income tax returns was eight days later than originally planned. Not one to lose business because of a minor thing like an IRS delay, however, Block cautioned that this does not mean taxpayers have to delay preparing their tax returns. “Whether taxpayers prepare in one of H&R Block’s 11,000 tax offices or use our At Home product, they can prepare their returns now and we will hold them until the IRS is ready to begin processing,” said the chain.

“While the IRS indicated some forms may be delayed, the majority of taxpayers can begin the filing process now. By preparing the tax return with H&R Block now, taxpayers can have confidence they’ll get their tax refund as fast as possible,” said Kathy Pickering, executive director of The Tax Institute at H&R Block.

According to IRS data, approximately 18 million total taxpayers typically file a tax return in January with 98 percent of those receiving a refund, Block noted. “With refunds now coming several weeks later, those who can afford it the least are impacted the most,” Pickering said.

To ensure timely processing of the return and refund delivery, H&R Block recommended that taxpayers still prepare their return as they normally would.

Like Block, Jackson Hewitt also urged taxpayers to start early, despite the IRS delay.

“Despite the new filing date, taxpayers can—and should—start having their tax returns prepared,” said the company. “Jackson Hewitt Tax Service now has thousands of locations open around the country to assist taxpayers in answering their questions and preparing their returns. Approximately 18 million taxpayers file in January.”

“Although unfortunate and burdensome for millions of taxpayers, this IRS delay does not impact our readiness or our ability to work with our clients,” said Jackson Hewitt president and CEO Philip H. Sanford. “In fact, the delay, which is one of many complexities resulting from the recent fiscal cliff negotiations, points to how this year is even more challenging than years past. Now more than ever is the time to work with an experienced tax preparer to navigate the many changes and ensure every taxpayer makes the most of those changes.”

Jackson Hewitt insisted that its systems and software are all up to date, even though the IRS had just announced that its own systems were not. “Those who are ready to begin the filing process can stop by their local Jackson Hewitt, begin their return, determine the amount of refund owed to them and select how they prefer to receive their refund and have everything finalized for the IRS acceptance date,” said the company. “The IRS anticipates that nine out of ten refunds will be issued again this year in less than 21 days, and even with the delay for filing until January 30, the sooner taxpayers file their returns, the sooner they will get their refunds. “

Most taxpayers will be able to file their returns on January 30, including taxpayers who itemize deductions and claim the sales tax deduction, Jackson Hewitt noted, although that might make its offices a little bit crowded.  However, the company acknowledged that taxpayers who claim an energy credit, depreciation or business credits would be delayed until late February. 

For its part, Liberty Tax Service recycled excerpts from a news release it issued last Friday, correctly predicting that tax season would be delayed (see Fiscal Cliff Law May Delay Tax Season, Liberty Warns). The new release included the same quote from CEO and founder John Hewitt, who had earlier co-founded Jackson Hewitt and was a former Block executive. “This has been an epic beginning to tax season 2013,” Hewitt reiterated. “I’m starting my 44th tax season looking at the worst delays in filing I have ever seen. Fortunately, we have the most experienced management team of any tax preparation company and are ready to navigate these rough waters.”

Liberty acknowledged that the IRS’s announcement meant that the vast majority of tax filers—more than 120 million households—should be able to start filing tax returns starting January 30. However, it added, “to further frustrate the situation, refunds could be delayed to mid to late February.”

“Due to the last-minute tax law changes made by Congress under the American Taxpayer Relief Act (ATRA), the IRS has scrambled to update forms and make critical programming changes to its processing systems,” Liberty explained. “They also anticipate that the remaining taxpayers will be able to start filing in late February and early March because of the needed changes on the more extensive forms and processing systems. The IRS provides a full listing of the forms that are currently not being accepted on their web site: IRS.gov.

“Liberty Tax is staying in contact with the IRS to keep abreast of the release of these updated forms. And we are fully prepared to move forward and help our customers get their money as quickly as possible," said Hewitt. 

Throwing cold water on Block and Jackson Hewitt’s insistence that taxpayers stop by anytime to get their tax returns prepared, Liberty noted that the IRS emphasized that there was no advantage to filing on paper before January 30. The company reiterated that taxpayers would receive their tax refunds much faster by e-filing their return. More than 80 percent of taxpayers filed electronically last year.

Liberty said it would be “working alongside the IRS to help the American people with the delays this tax season and to ensure they receive the most current and accurate tax assistance.”

The IRS could have used some of that timely help from lawmakers in Congress who waited until the last possible minute—plus about 24 hours beyond that—to finally pass the fiscal cliff legislation setting the tax rates, patching the AMT and extending the expired tax breaks.


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