The economic crisis and the downfall of the real estate market spurred a slew of tax law changes that will impact the upcoming filing season.

While some of the new laws could mean more money in the pockets of some filers and more taxes for others, for tax advisors it will mean taking on a new profession - fortune-telling.

"The most important thing that we are going to be faced with in the first quarter of 2010 is dealing with the increased pressure put on the tax advisory community to be fortune-tellers," said David Lifson, a partner at New York City-based Crowe Horwath. Lifson noted that for the past 20 years, most of the changes in the tax system have been neutral or favorable to taxpayers. Now, however, there is a stated governmental policy of tax increase, and the question for the crystal ball is who it will fall on, and how.

"We are going to be called upon to help our clients support their educated guesses on the who and how of tax change," explained Lifson.

Staying abreast of the latest tax law changes is always an imposing task for accounting professionals, but one could argue that it will be even more important this filing season.

In order to spur the economy, several initiatives have been put in place that will impact taxpayers, but industry sources agree that unearthing some of the money-saving opportunities will require a bit more legwork than in prior tax seasons.

NEW THIS YEAR

One example is the expansion of the net operating loss carryback option, which impacts businesses. The relief provided under the Worker, Homeownership, and Business Assistance Act of 2009 differs in that the previous relief was limited to small businesses, the Internal Revenue Service stated.

The current relief applies to any taxpayer with business losses, except those that received payments under the Troubled Asset Relief Program. The relief also applies to a loss from operations of a life insurance company.

According to the IRS, eligible taxpayers may elect to carry back NOLs for a period of three-to-five years, or a loss from operations for four or five years, to offset taxable income in those preceding taxable years. An NOL or loss from operations carried back five years may offset no more than 50 percent of a taxpayer's taxable income in that fifth preceding year, a limitation that does not apply to the fourth or third preceding year.

The procedure applies to taxpayers who incurred an NOL or a loss from operations for a taxable year ending after Dec. 31, 2007, and beginning before Jan. 1, 2010.

What this means is that tax advisors preparing taxes for businesses may have to take an even closer look at the client's history to determine how best to take advantage of the expanded NOL carryback.

Karen Fickes, managing editor of the U.S. Income Tax Group for BNA Tax & Accounting, considers the expansion of the NOL provision to be significant.

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