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Tax extenders and filing-season misery

Misery. Yes, it’s a Stephen King novel that was made into a movie. But it is also the existential state of many taxpayers trying to comply with a more-and-more complicated tax code despite less-and-less assistance from the IRS.

IRS Commissioner John Koskinen was candid in calling last year’s filing season “miserable,” as budget cuts reduced the IRS’s ability to provide customer service at a time when its workload was increasing due to the agency’s role in implementation of the Affordable Care Act.

Will next year be any better? In this post, we will discuss the role of one of the particular challenges for the IRS as another filing season approaches: “tax extenders.”

Various tax credits and other breaks in the federal tax code are written to expire at a certain date unless Congress acts to extend them. An extender is legislation that provides this extension.

Every year, questions about whether to renew some or all of these expiring provisions arise. But often Congress waits until very late in the year to decide on them.

Last year, it wasn’t until December 16 that Congress acted to renew a number of tax provisions that had actually expired at the end of the previous year. The renewal was made retroactive to January 1, 2014.

For the IRS, the administrative burden of making tax forms and computer systems compatible with the extended provisions on such short notice was considerable. It added to the overall misery of the filing season.

This year, it looks like déjà vu all over again on tax extenders. And that could lead to more misery during the 2016 filing season.

Source: Forbes, “2015 Tax Season “Miserable” For Many Taxpayers: Will It Get Better In 2016?” Kelly Phillips Erb, Sept. 21, 2015

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