The Top Stories in Tax in 2013
Our editors’ picks for the 10 biggest stories of the year in tax
It was a busy, busy year in the world of tax, with more than enough excitement, misery, embarrassment, surprise court rulings and angry congressional hearings to go around.
Here, we pick our favorites for the biggest stories of the year, in chronological order.
With the delays imposed by the fiscal cliff imbroglio, tax season got off to a very late start, and then just got worse. Issues of all kinds -- from high-profile software glitches to slow delivery of source docs to the fact that many forms weren’t even ready until early March -- made this one of the worst tax seasons ever, and led to an unusually high number of extension filings, with around 12 million for a season when around 8 million would have been more common.
The one silver lining of the cloud that the fiscal cliff cast over tax preparation was the fact that its solution included a permanent fix to the Alternative Minimum Tax trap that had bedeviled us each year for several years. Congress will no longer have to rush to pass a fix each year, which means it will have to find other ways to delay tax season. Stay tuned … .
In a January ruling that came as a surprise to many, U.S. District Court Judge James Boasberg struck down the IRS’s Registered Tax Return Preparer regime, ruling that the service could not require preparers to get continuing education or pass a competency test (though it can still require them to get -- and pay for -- a PTIN). The IRS vowed to appeal, and eventually did in October; as of early December we were still waiting for that ruling.
While not everyone may consider it a cause for celebration, the U.S. income tax and the 16th Amendment that allowed it marked their 100th anniversary this year.
Starting in April, a seemingly endless string of IRS training and motivational videos based on real TV shows (like the one of Star Trek pictured above) began turning up. From Gilligan’s Island and The Apprentice to Mad Men, the videos have become an example for many of bad government spending -- but they weren’t the worst revelation the service suffered … .
Forget the videos: Revelations that IRS employees had targeted conservative social welfare groups for extra scrutiny led to the firing of then-Commissioner Steven Miller (pictured) and his replacement by current Acting Commissioner Danny Werfel in May, as well as a long series of hearings in Congress that generated more heat than light. The IRS and the Treasury have since released clearer (and stricter) rules regarding social welfare groups. (Photo @ Reuters)
The Supreme Court’s June ruling against the Defense of Marriage Act had tremendous national repercussions -- not least in the area of taxes, where same-sex married couples now face a range of filing and planning questions, and will be looking for help from their tax preparers.
In the wake of October’s two-week government shutdown, the IRS announced that it would be pushing back the date it would begin accepting returns by at least a week, and possibly two -- setting the stage for yet another compressed filing season.
In December, the Supreme Court refused to hear Internet retail giant Amazon’s appeal of a New York State court ruling from the spring, essentially saying that states can require Web retailers to collect sales tax, even if they don’t have a direct physical presence in the state.
It’s not just the delayed start to tax season that has preparers crossing their fingers as they look ahead to next year -- there’s also worries about finding qualified staff, adapting to new technologies and new solutions, all the new taxes and requirements that kick in as a result of the Affordable Care Act, new rules and new possibilities for same-sex couples, and much more to keep you on your toes.