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Possible Delay to 2015 Tax Season

In a letter dated October 6, 2014, IRS Commissioner John Koskinen wrote to Senate Finance Committee Chairman Ron Wyden expressing his concern about the upcoming 2015 tax filing season. Specifically, he is worried about dozens of tax breaks which lapsed at the end of 2013.

These tax breaks, known as "extenders," affect a variety of taxpayers' expenditures - everything from corporations' overseas financing to teachers' out-of-pocket expenses to alternative fuel source initiatives. It is up to Congress to decide whether or not to extend the expired provisions by "no later than the end of November," according to Koskinen. Congress has been deadlocked over how to extend them - not surprising considering the looming elections. By failing to act Congress has caused "a great deal of uncertainty" for the IRS. This uncertainty, if it persists, "could force the IRS to postpone the opening of the 2015 filing season and delay the processing of tax refunds for millions of taxpayers."

The extenders have been regularly renewed in past years. In April, Senator Wyden's committee approved legislation to keep the list of tax breaks active through 2015, but the measure got bogged down by political quarrels. It is possible that Congress could rule on the provisions past the deadline and simply make their decisions retroactive. Koskinen warns against such a practice, though, stating, "If Congress waits until 2015 and then enacts retroactive tax law changes affecting 2014, the operational and compliance challenges would be even more severe." It could lead to millions of taxpayers filing amended returns, among other disruptions.

Let's hope that Congress acts swiftly with clear policy direction so that the upcoming tax season is not any more painful than it has to be. In the meantime, the attorneys at McBrayer are here to help you with your tax planning. We can help taxpayers identify and plan for maximum tax benefits while avoiding tax controversies. And, unlike Congress, we're sure to act fast.

This article is intended as a summary of state and federal law and does not constitute legal advice.

Required Disclosure under Circular 230:

Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose. No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party.

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