It's been over three weeks now since Congress and President Obama reached a deal to avert the fiscal cliff. Reaching the deal was a relief to many. But the complexity of the various provisions involved could cause considerable confusion as the new tax return season gets underway.
The IRS has already delayed the date when it will begin processing returns. In order to take account of changes in legislation that avoided the fiscal cliff, the IRS has announced that processing will not begin until January 30.
Even with the delayed start to the season, there may be a lot of confusion among taxpayers about the changes. Uncertainty about which tax credits and tax deductions still exist could affect tax audits and result in tax litigation.
In fact, taxpayers who plan to claim certain types of tax credits may have to wait even longer after January 30 to file their taxes. This group includes taxpayers who intend to take energy credits and allowances for depreciation of property. General business credits are also affected. The information needed to file for these credits may not be available until the end of February or even March.
There are also many other tax credits and deductions that will affect the calculation of 2012 taxes. The fiscal-cliff deal involved an array of credits and deductions related to education. It also addressed the deductibility of state and local taxes. And it included a permanent "patch" for the alternative minimum tax (AMT) that adjusts the AMT for inflation.
Source: "Expiring Credit, Deductions Extended by Congress," KRISTV.com, 1-23-13
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