Extend returns, not tax season
The idea of extending filing season by a month is still “kicking around” according to Stephen Mankowski, immediate past president of the National Conference of CPA Practitioners. Those who support it say that it is necessary to make up for the partial government shutdown, which hampered the IRS going into tax season.
“The fear is that if you do it for one year, people will look for it every year,” said Mankowski. “For those who are procrastinators, it will just give them more time to procrastinate.”
And multi-office tax firms, including the national tax firms, are concerned that extending the time to file could significantly increase their payroll expenses, according to Chuck McCabe, president of Peoples Income Tax. “They would need to continue to keep branch offices open and continue to pay tax preparers. Preparers that are on commission would not be an issue, but they may not want to or not be available to work after April 15. Our office manager in a high-volume branch office goes on vacation immediately after April 15.”
If you think it’s a compression issue because you’re getting the forms later, just file an extension, advised Mankowski.
“I put in corporate extensions two weeks ago,” he said. “I go through my business clients in late February and early March and spend an hour or two and file extensions. Then I go back and do the same for any new clients. The client is protected, and I don’t have to worry that I didn’t get the return filed on time. Otherwise i’m sitting here and making a whole bunch of phone calls.”
The refund rebound
Mankowski, who recently returned from a National Public Liaison meeting, said that IRS Commissioner Chuck Rettig took note of press reports about smaller refunds. “He said that you can’t gauge how good or bad tax reform was based on the size of the refund, but on tax liability. And average refunds were down at the beginning of filing season because the service was holding [Earned Income Tax Credit] and Additional Child Tax Credit were being held. Once those started getting paid, the numbers changed. As the commissioner indicated, you can’t take an average over a short sliver of time -- you need to see how the numbers play out over the entire filing season.”
“People who itemize are are getting hit harder by these rules as opposed to someone who didn’t itemize,” Mankowski observed. “The effect of losing the personal exemption comes into play for those who itemize.”
While the current filing season statistics show a slightly lower percentage of professionally prepared returns filed by electronic return originators, Mankowski feels that the number may end up being higher for returns prepared by tax professionals. “It’s my gut feeling, but a lot of taxpayers might have thought they could prepare their own returns because they don’t itemize, but then when they see the new form they realize they have no clue,” he said. “Now, they not only have to figure out a new system, but they have to fill out a completely new form. Recently I’ve had people come in who tell me that they want me to do the return this year and they’ll do it themselves next year. I tell them, ‘If you’re comfortable doing the return yourself, go for it. If you need help, give me a call.’”
“It’s the taxpayer’s return, but you earn a little credibility by letting them know you’re there to help them,” he said. “They’re paying for the service this year, and part of your service is explaining and helping them understand.”