This tax season is predicted to be the worst in years for both the IRS and for taxpayers. Nina Olson, the national taxpayer advocate, believes it could be as bad as 1985, which lost returns and delayed refunds due to a computer failure.
This year it is a potential disaster because the IRS budget keeps getting smaller and the tax code more complicated. This is also the first year the IRS will have to administer premium tax credits, the Foreign Account Tax Compliance Act and individual mandates under the Affordable Care Act.
While firsts are never perfect, the IRS has limited resources due to budget cuts. Congress has dropped the IRS budget by 10% in the past five years, and has not accounted for the cost increases.
While the number of taxpayers has grown by about 7 million people, the number of IRS personnel has dropped by 8%.
IRS Commissioner John Koskinen warned that refunds may be possibly delayed and that there will be less taxpayer service.
According to CNN, Olson “estimates that 47% of the calls coming into the IRS probably won’t be answered during the filing season. The other 53% of people lucky enough to get through will have to wait an average of 34 minutes to talk to a human being.”
Koskinen promises the IRS will keep everything running as smoothly as possible, but the agency will still be stretched thin. “All we can try to do is maximize the resources available in that January to May time frame to make sure that … we do as well as we can. And ‘as well as we can’ is still going to be miserable,” he said.
If that misery includes greatly delayed refunds, Americans won’t like it. Currently Americans have one of the best tax compliance rates in the world and it would costs the government billions if that was to change.
We hope this tax season isn’t as miserable as it’s predicted to be! It may be best to start filing your taxes as soon as possible. Since the tax code is increasingly complex this year, it could be a good idea to consult a tax professional. At Advocate Tax Solutions, our tax consultants will prepare this year’s taxes for you as well as file any prior year’s unfiled tax returns. For all your tax preparation, accounting, and back tax questions call your tax representatives at 888-737-0200 or visit www.advocatetaxsolutions.com.
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