The Internal Revenue Service will need to be ready for a wave of tax return filings from procrastinating taxpayers, as well as requests for extensions as late-breaking guidance on new tax breaks like the tips and overtime deductions ripple across the industry, straining the IRS's computer systems.
The IRS is coping with
There may be a last-minute surge of tax filings that could overwhelm the IRS servers, as occurred in 2018, when the agency had to
"We've had this happen in the past, and I wouldn't be surprised if it happens this year, because I'll tell you my experience this filing season as a microcosm," said Tom O'Saben, director of tax content and government relations at the National Association of Tax Professionals, during a press call Tuesday. "The greater tax-filing public have been really backloaded this year, in the filing season. People did not file early. Rather, they were waiting, probably because of understanding information or expecting more guidance coming out from the IRS on the One Big Beautiful Bill, the constant delays in receiving documentation that is needed to file returns, like K-1s or 1099 consolidated statements."
He noted that the IRS statistics indicate filing was behind for most of the season and warned against trying to file late in the evening of April 15.
"Now we're coming up to crunch time," said O'Saben. "What I would expect tomorrow — and this could be advice for anyone out there — if they're going to wait especially until later in the day tomorrow, you could very much expect e-file system shutdowns, or even perhaps some crashes in software at the commercial software companies because of the volume. Think about the amount of traffic at rush hour on a highway. This is the same thing when you're dealing with computer systems. There could be a circumstance where your experience could be bad if you're waiting until the absolute last minute."
Accounting Today asked the IRS about whether its systems and staff would be ready to handle a last-minute surge of tax filings on April 15, and a spokesperson forwarded a link to a
"No staffing shortage here," he told Fox host Stuart Varney. "You have to look at the results we've been producing. Tax season is about finished here. It's the last week, and we've implemented all the changes that were needed for the Working Families Tax Cuts."
Asked whether the IRS is using AI, he said the IRS is "using every tool imaginable." The spokesperson also pointed to Bisignano's recent
O'Saben has noticed a slowdown in IRS responsiveness and acknowledgements lately, especially this past Saturday. He advised taxpayers to file for extensions before the deadline rather than avoid filing altogether, especially if they're still unsure about their taxes. He pointed out that the penalties for failing to file are far higher than the extra interest taxpayers may be charged if they owe money to the IRS. He noted that the IRS website has a
"The penalty for failure to file is as much as 5% per month of the unpaid balance, up to a maximum of 25%," said O'Saben. "If we've got a situation where we've got a good extension filed and we still don't pay, then at least what we're going to have ticking from April 15 on is interest, which isn't great, but it's the lesser of the two penalties. If we can get an extension filed, please try to do so electronically."
"If you're going to walk in with either payments that you're mailing in, or this extension to file, and you want to postmark with today or tomorrow's date, walk in during their business hours, walk up to the counter and ask the Postal Service representative to hand cancel that envelope immediately, right there," said O'Saben.
Some tax returns may need to be amended because of recent changes in the tax regulations for provisions related to the One Big Beautiful Bill Act, such as the
O'Saben pointed out that despite the late release of that guidance, the IRS is allowing taxpayers to rely on earlier guidance for this tax season giving taxpayers and preparers flexibility to make a reasonable effort at claiming the deductions for 2025, so amended returns probably won't be needed.
"Even though we've got the guidance that they were allowed to use their best effort, I think we can still make that argument, if there's documentation to support those tips," he said. "I would argue that the late release of that guidance would create a situation where, if the IRS wanted to try to disallow the tip deduction, [we can] say that we've got the documentation, your guidance came out late, and we don't see the reason that we wouldn't be allowed this deduction. But certainly going forward, I think we need to be aware of those occupations that could be typically tipped."
Accountants and tax preparers weren't expected to qualify for the tip deduction since they have been excluded from other tax breaks like the
"We know that the specialized service trades or businesses like ourselves were excluded from the beginning, so it's not commonplace to receive a tip," said O'Saben. "Clients give me a tip now and then. I just report it as regular income, and I don't attempt to take a tip deduction. But I think that could be an issue."
He warned, however, that there may be other consequences for those occupations that can now claim the tip deduction, since they have now been assigned code numbers on the list of Treasury Tipped Occupation Codes in the
"There's a backdoor outcome of the identification of these industries," said O'Saben. "Going forward, we're going to see those codes for those industries on information documents. That's going to provide a source for the IRS to be looking at those industries where it is common that there's tips and no one's reporting any. I'm seeing this as possibly a backdoor check on people who haven't been reporting tips, and now they've had their industry classified. They're going to have to get more serious about reporting their tips."
He doesn't believe it will be necessary to file an amended return as long as taxpayers have third party documentation, such as a Form W-2 or 4137 to support the deduction they took at 2025, but they will have to be careful about reporting next year as well.
"The clarification of these industries creates a circumstance where people who perhaps thought they were sliding under the radar and not reporting their tips are going to possibly get inquiries from the IRS in the future, saying, 'You're in a kind of industry that gets tips, yet we don't see any on your return. What's going on?'" said O'Saben. "It could end up being kind of a side door issue going forward."
