Retro Grade: What Went Right and Wrong This Tax Season

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Three little letters, brokers' mailrooms and keyboarding crooks seemed the major troublemakers of the season just gone by, according to preparers.

"The worst season ever!" said blogger and Enrolled Agent John Dundon, of Taxpayer Advocacy Services, Inc., in Englewood, Colo.

"Definitely more a challenge, more than other years and certainly worse than expected," said EA Sherry Whah, in Anchorage, Alaska. "The verification of the [Affordable Care Act] and lack of information from taxpayers delayed processing. The ID theft issue caused additional delays, with the taxpayers losing their [ITINs] or not understanding the correspondence they received, or both. And some refunds are still in processing from filing in early February."

"Delay in investment reporting forms caused a jam of late filers," said Jaimee Hammer, an EA in Cherry Hill, N.J. "They're coming to us later and later every season due to the delay in receiving their forms and amended forms coming through."

Tough can be in the eye of the beholder. "I don't think it was as bad as projected for me. My clients may disagree," said Becky Neilson at Neilson Bookkeeping in Sheridan, Calif. "First off, the ACA, I was prepared for. I've worked as a Certified Enrollment Counselor for Covered California since 2013 and knew the law very well. The biggest thing for most of my clients was delays in receiving documents from brokers, banks and the like ... until late March and early April. I filed a lot of extensions."

For some, the season just went well. "Aside from the reporting changes due to the ACA, filing went smoothly," said preparer Sandy Szumiloski in Harleysville, Pa. "Certain IRS and state forms were delayed, so the start of the season was pushed back."


Despite budget cuts and withheld funding, at least the IRS held up under the filing chores created by the Affordable Care Act, according to Commissioner John Koskinen's testimony before the Senate Homeland Security and Governmental Affairs Committee.

"Only five or six were upset about paying the [ACA] penalty, when I expected a lot more would be upset," added Bob Smith, an EA at Albert Lea Tax Service, Albert Lea, Minn. "We had over 150 clients who paid the penalty."

"It did seem to be a little crazier than usual. All of the insurance issues that I had never had to fool with before was one reason," said EA Leslie Casteel of Casteel & Co., Knoxville, Tenn. "I probably brought a little of it on myself. If someone had a penalty, I'd go out to the site and see if they qualified for the exemption based on family size and income."

Because of the ACA and for the first time in his career, preparer Paul Knapp of Exact Income Tax Service, in Santa Fe, Texas, trained staff preparers "by simply saying we had to rely on our software to teach us. I use good software, and that worked for us. A horrible way to do business, but it got us through."

"We anticipated much confusion relative to the ACA, not only in explaining the process as best we could to our clients but among the preparers trying to get a clear grasp of it all," said EA Twila Midwood of Advanced Tax Centre, Inc., in Rockledge, Fla. "Most of our clients have health insurance; the few who didn't or those who acquired insurance through the Exchange were familiar with the requirements. They weren't surprised if they had to pay back any of the credit or were subject to the penalty."

Advanced Tax Centre incorporated ACA requirement questions on its client questionnaire this year, Midwood added. "In addition, the questionnaire clearly states that 'As a result of this tax law, the cost for the preparation of your tax return will increase based upon the complexity required to comply with the Affordable Care Act,'" she added.

For some, ACA requirements turned into a non-complication, at least when it came to filing. "No better, or no worse, than any other for me," said preparer Robert Flach, writer of The Wandering Tax Pro blog. "Dealing with the new Obamacare issues was nothing more than a time-wasting inconvenience. In most cases I was able to tell if clients had coverage via their W-2 or Social Security or Railroad Retirement 1099.†Very, very few clients, fewer than a handful, had to pay the penalty or reconcile†an advance credit."

Not true for others, including some 800,000 taxpayers who received faulty ACA forms early this season. "Fortunately, our clients didn't experience the erroneous 1095-A issues reported in the media," said J. Alan Fagan, an EA and founder and CEO of The Mattox Group, in Marina, Calif. "Sadly, many of our clients did face unexpected repayment of the credit."

"It was harder to get proper information concerning the ACA if a person never received the 1095," added R. Dale Dixon, an EA and president and CEO of The Tax Surgeon LLC in Smyrna, Ga. "The ACA helped some people and hurt some who didn't expect the pain."

Knapp also suspected that the "IRS had more glitches than announced. The first 1095-A client we sent in didn't get his refund in 21 days.†The IRS said that the return was 'affected by a processing problem that should be resolved in four to six weeks.' He got his refund at about 89 days."


"Thirty percent of my client based showed up in the last two weeks," said preparer Jim Loperfido at JGL Management Consulting, in Auburn, N.Y. "February was unlike other years. Usually the refund lovers rush in to get money back quickly. We did have plenty of them, but not like in the past."

"Seems like we were less busy in February and busier in March," added preparer Jeffery Sauer in Minnetonka, Minn. "The first half of April†was hectic. I think the main culprit is the 1099 from brokerage houses: People have figured out that they're getting amended 1099s so they're delaying in coming to their tax professional until they feel assured they have the final version."

"The IRS allowed financial institutions to delay the release of their consolidated 1099s until, really, March 1," said EA David Spaulding, a principal with Janover LLC in Garden City, N.Y. "This alone squeezes the same amount of tax preparation into two to three weeks less than we had a few years ago."†

Mele A. Perrego, an EA in Clayton, N.C., ran into a more localized delay."North Carolina totally revamped their tax structure into a flat tax," Perrego explained, "eliminating many deductions and credits, which created more than the usual amount of balance-due returns which, in turn, created more than the usual amount of explanations needed to sooth the angry client -- many of whom vented on me."

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Tax practice