IRS Expects Tax-Refund Delays

The Internal Revenue Service is expecting a plethora of complications with the coming tax-filing season, IRS Commissioner John Koskinen said in an interview with the nonprofit publisher Tax Analysts that was published this week.

Mr. Koskinen suggests, “The difference this year compared to the past is we are having to implement the Affordable Care Act and Fatca,” he said. Fatca is the Foreign Account Tax Compliance Act, passed in 2010. The program is designed to discourage offshore-account abusers, with many of its major provisions going into effect this year. Moreover, Congress has yet to reinstate dozens of tax provisions that expired at the beginning of 2014. In past years, Congress’ failure to act on such provisions tends to result in delays that affected taxpayers.

Earlier this month, the IRS chief sent a letter to Senate Finance Committee Chairman Ron Wyden (D., Ore.) attempting to warn him and other lawmakers of the complications that were likely to arise should action be delayed much longer.

In the letter, Mr. Koskinen said the uncertainty over the expired provisions, “if it persists into December or later, it could force the IRS to postpone the opening of the 2015 filing season and delay the processing of tax refunds for millions of taxpayers.”

While Sen. Wyden agreed with Mr. Koskinen that Congress should move decisively to restore the provisions, Congress is not expected to address the extenders until after the election next month.

The expired provisions include a deduction for state and local sales tax; a tax exemption for the forgiveness of mortgage debt; a tuition deduction; an enhanced break for transit commuters; and the individual retirement account charitable rollover, which enables people 70 ½ and older to make tax-free donations of IRA assets to charity.

Source: Saunders, Laura, “IRS Chief Warns of Possible Tax-Refund Delays,” The Wall Street Journal, October 23rd, 2014