Clients have a lot of questions this year beyond just higher taxes. Preparers report they’ve already begun fielding inquiries about the later start to tax season and possible delays in refunds.
The IRS said earlier this year that it plans to open the 2013 tax filing season and begin processing individual income tax returns on January 30, more than a week after the initially planned start date, and that some returns cannot be processed until late February or March. Regarding refunds, the IRS has stipulated that although it did issue more than nine out of 10 refunds to taxpayers in less than 21 days last year and same results are expected in 2013, “It’s possible (a) tax return may require additional review and take longer.” New identity-theft counter-measures may also cause delays in refunds.
The result: additional questions from clients in what already would have been a tax season with much anxiety due to the fiscal cliff deal. Though some clients may walk in informed and reasonable, others won’t.
“It's hard to predict exactly what the late start is going to do to us,” said Enrolled Agent Judy Strauss, an H&R Block franchise preparer in Cobleskill, N.Y., and a member of the National Association of Enrolled Agents. “Normally our last two weeks in January are extremely busy with our early filers. Somehow those 100 per-day clients will need to be filed along with the same February clients we always have.”
“Everyone is told their refunds are going to be delayed because of the late start and because the IRS is now touting a 21-day cycle, no longer an eight-to-10-day turnaround,” she added.
EA Andrew P. Stadler of Terre Haute, Ind., also an NAEA member, advised telling clients, “Don’t play a particular political party game, but just blame it on Washington and their inability to work together -- politics at its worst and the taxpayer is taking it on the chin. If you have clients that have their tax documents and they are ready to file their tax returns, encourage them to come in now to complete the return. The IRS has waived the stockpile rules for this tax season.”
CPA Keith E. Huebel of Bel Air, Md.-based Huebel & Associates and board member of the National Society of Tax Professionals, advised being upfront with clients that due to congressional delays in passing laws late in the year, the IRS must reprogram their systems to comply with the changes, and tax season will be delayed until late January for some 120 million taxpayers -- “with many more not able to file until late February,” he said, the latter including, but not necessarily be limited to, returns claiming residential energy credits, depreciation or general business credits.
Huebel also advised letting clients know that the IRS will also launch a “Where’s My Refund” application for 2013, no longer adhering to a “Refund Schedule” as in years past. “‘Where’s My Refund’ will attempt to have responses available on the Web site and phone application within 24 to 48 hours,” he added, with refunds available within 21 days of processing. He also advised letting clients know that the site is updated daily and that additional descriptive information will be available. “It may not be case-specific, as it will use generic language, but it still will be an enhancement to the older system,” Huebel said.
Strauss also said that her company has been helped not only by the stockpiling waiver but by ADP and Paychex not yet issuing W-2s yet due to the reporting requirements of the health care benefits employers are paying on behalf of their employees.
Though some preparers predict clients will shower them with questions no matter much information they disseminate, other preparers are trying to head off problems.
“Clients coming into the office at this time of the month are able to have their returns completed and sent on for holding,” Strauss noted. “Being able to download W2s -- when ready -- and New York State unemployment forms helps with the process. Without the actual forms, we can still prepare the return and put it on hold,” she added. “Starting and having the basic information in the system saves time later.”
Strauss added that her office is capturing clients’ e-mail addresses or text numbers so clients can be advised of the status of their returns.
One of the best prep tools remains client letters detailing what is and isn’t known about delays in filing and refunds.
On the LinkedIn discussion group for the “National Association of Tax Professionals,” preparers advise telling clients that if they need their refund, not to wait to file. “I didn't want to tell my clients about the 20 million taxpayers who will not be able to file until late February or early March. I was afraid that might cause them to delay making their appointment,” wrote one preparer, who added that she’s also thinking about a client handout that explains the delays in filing and refunds. Other preparers are blogging about the delays and stressing to clients that they have no control over refund approvals and other delays.
“Informing them about the delay presents an opportunity to tell them the positive news of the extended laws, particularly if some apply to them,” another preparer noted. Other preparers said delayed refunds are a chance to inform clients about retirement savings and other tax-deferred payments they could be making throughout the coming year.
But, noted one preparer, “I am going to jokingly tell my clients that anyone who gets a refund before July 1 is just plain lucky.”