Will “record-setting” number of tax extensions impact tax pros?

Tax preparation and accounting offices throughout the country reported record-setting extension requests for tax filings this year. The increase was the result of many different factors, including:

• New tax law. The Tax Cuts and Jobs Act (TCJA) was, arguably, the biggest reason for the jump in extension requests. The new law was the biggest change to our tax structure in decades. Navigating the changes was not an easy task. As a result, many taxpayers and tax professionals required an extension just to figure out how to properly file tax returns.

• Delayed tax forms. Business tax extensions resulted in delayed tax paperwork. This meant individuals may not have received the paperwork they needed from employers, like K-1 forms, to complete their tax returns in a timely manner.
• Procrastination. Perhaps taxpayers were concerned about navigating the new law or maybe other factors contributed, but accountants noted larger numbers of clients than usual waited to the last minute to begin conversations about their tax filings.

What will this mean for tax professionals?

It is likely to be a busy summer season for tax professionals. As one tax pro noted, “this cowboy won’t be roping and riding on any summer vacations this year.” Tax professionals will likely find themselves busy helping taxpayers with extensions as well as providing assistance to the 41% of taxpayers who are contacted by the IRS after completing their filings. This can be due to tax penalties or notification of an audit.

Some may find themselves dealing with an audit of their practice. Tax professionals that receive notification from the IRS of an impending audit can take action to defend their interests. An attorney experienced in tax preparer legal matters can help.