The Daily Star, Oneonta, NY - otsego county news, delaware county news, oneonta news, oneonta sports

January 9, 2013

'Cliff' could delay area tax returns

By Joe Mahoney
The Daily Star

---- — A week after politicians in Washington patted each other on the back for cutting a last-minute deal that ends the “fiscal cliff,” local tax preparers say they are getting headaches over delays by the federal government in coming up with the tax forms needed to get the 2013 tax season started.

The Internal Revenue Service confirmed Tuesday afternoon that it won’t be able to start processing any tax returns until Jan. 30 — about two weeks later than it usually begins to handle returns.

The 11th-hour agreement hatched by Congress and the Obama administration to resolve the so-called fiscal cliff has left the tax preparation industry without a clear vision of what will be contained in the new tax forms that still have to be produced, local tax accountant George L. McLain said.

“We really don’t know how this is going to effect people because we haven’t seen it yet in black and white,” said McLain, who runs a tax preparation service with offices in Sidney, Oneonta and Bainbridge.

The IRS said in a statement that even with the delay the “vast majority” of tax filers — approximately 120 million households — “should be able to start filing tax returns starting Jan. 30.”

The agency admitted it still hasn’t figured out exactly when the remaining households will be able to start filing, However, agency officials speculated that the processing of more complex returns will begin in late February or March “because of the need for more extensive form and processing systems changes.”

“There are several forms affected by the late legislation that require more extensive programming and testing of IRS systems,” the agency said. It said an announcement of when the new forms will be made available to the public will be issued “in the near future.”

Rick Dickson, co-owner of Liberty Tax Service in Oneonta, said the delay in processing forms by the IRS will lead to tax refund checks being mailed out later than many taxpayers had anticipated.

“This could create problems for those counting on an early refund,” Dickson said. “It’s going to be about three weeks later than they normally get them.”

He said while the IRS is delaying the date when the agency will begin processing returns, there has been no indication that it will extend the tax filing deadline. In New York, the deadline for filing income tax returns this year is April 15.

McLain said the IRS must design the new tax forms so the tax-preparation software industry can craft programs consistent with them. For the IRS to be able to configure the new forms, it relies on getting accurate information from Congress, and that is what has caused the delay, he said.

“Congress has been dragging its feet and leaving everyone in the dark,” said McLain, noting local Rep. Chris Gibson, R-Kinderhook, vowed to look into the situation when the two met in Oneonta on Monday.

McLain said he is still waiting for the IRS to release details about how the fiscal cliff agreement will affect taxpayers who have been subject to the alternative minimum tax.

That tax has been paid by some 28 million middle-income Americans. News accounts have suggested there fiscal cliff deal will provide some relief for those who were subject to the alternative minimum tax, as a “patch” applied to it will result in its qualifying incomes being indexed for inflation.

McLain said he hopes the federal government will quickly resolve the outstanding questions on how the fiscal cliff agreement will impact the tax structure.

“I think it’s going to be a little bit panicky early on, but then I think it will level out,” he said. “We will know about the changes when we see them in black and white.”

The agreement in Washington is expected to result in workers seeing a bite in their paychecks as the result of the expiratyion of the Social Security payroll tax cut. The Social Security tax cut had left that rate at 4.2 percent, but it increases to 6.2 percent this year. Experts said that will result in a person earning $50,000 a year seeing about $80 a month less in his or her paycheck.