BREAKING NEWS: IRS delays and postponements.
January 3, 2013: "Fiscal cliff" tax bill was signed into law. Officially named the American Tax Relief Act of 2012, this bill is extremely long and complex, in spite of the popular press coverage of only one aspect of the bill: the change in tax rates for high-income taxpayers. The bill is actually 154 pages long, with only the first 10% of the bill relating to the the tax rates. The rest of the bill includes retroactive reinstatement of several credits and deductions (both the popular and the obscure) that expired at the end of 2011, including a permanent "AMT patch" that should avoid the AMT panic at the end of almost every one of the past several years, and raised limits for Sec. 179 depreciation and an extension of bonus depreciation. Most of these changes are not set to expire again until the end of 2013. There are also a number of deductions and credits that didn't expire until the end of 2012, but are now extended through 2013. There's also the extension of unemployment compensation and certain Medicare provisions, and the elimination of cost of living pay increases for members of congress. For the complete text of the tax bill click here: Fiscal Cliff Tax Bill (pdf).
January 8, 2013: IRS announces delay in start of 2013 filing season.
In a memo released today, the IRS announced that they have postponed the start of the tax season until January 30, 2013 for ALL Form 1040 tax returns. The IRS will accept absolutely no Form 1040 returns for tax year 2012, whether by paper or e-file, until that date. This delay will also affect all Tax Preparer releases because critical instructions have not been released yet for Form 1040 and many of this its schedules as the IRS scrambles to update them to the year-end "fiscal cliff" tax bill that was signed into law January 3. Forms and schedules that had already been released prior to that date and printed by the IRS (without instructions) contained several lines that eliminate details and simply refer to instructions, or have their usual labels replaced by the word "Reserved." These changes are most obvious in the released Form 1040, Schedule A, and Form 6251. We'll keep you up-to-date as we get more information from the IRS.
In addition to the delay for all returns, there is an addition 1-month delay for some tax returns.
If a return contains any of the forms in the IRS's long list of delayed forms, the return will not be accepted for filing or processed until late February or early March. This list includes such critical Forms as Form 4562 and Form 8582, so it affects most businesses that file Schedule C or F and most investors who file Schedule E!
To see the official announcement and a list of forms that can force a return to be delayed for yet another month, click on this link: http://www.irs.gov/uac/Newsroom/IRS-Plans-Jan.-30-Tax-Season-Opening-For-1040-Filers. The end of that IRS web page has a link to the list of forms that will be delayed even further. (Although a date has not yet been released, business tax returns, such as Form 1065 returns, are expected to be delayed even further, since most businesses relay on the forms that are being delayed until the end of February.)
January 18, 2013: IRS announces penalty relief for farmers.
Traditionally, there is no underpayment penalty for farmers who file their return by March 1 and pay the entire amount due. This year, however, most farmers will not be able to file by March 1 because the IRS is releasing critical forms and instructions late this year and will not even accept returns until then (or later) that include depreciation or any business credits! In recognition of this fact, the IRS released a memo today that announces that farmers and fishermen will not be subject to the penalty this year as long as they file and pay the entire tax due by April 15, 2013. This waiver is claimed on Form 2210-F by checking box A in Part I and leaving the rest of the form blank.
To see the official announcement, click on this link: IR-2013-7.
January 23, 2013: IRS releases instructions for Form 1040 and all its schedules.
More than a month later than normal, the IRS has now released the instructions for Form 1040 and all of its schedules, plus a few other important forms. Critical instructions for computing tax and retroactively renewed credits and deductions are now available, so we can proceed with the completion of our pre-relase for Form 1040 returns, which will be delivered later this week. However, the IRS will still not accept and process any returns until January 30, and will not accept and process returns that claim any depreciation (Form 4562) or business credits (Form 3800) until approximately March 1. In the meantime, we will work on the completion of the first regular release by the end of January so that you can start filing returns that are allowed at that time when the IRS starts accepting them.
January 29, 2013: IRS to delay accepting returns with a Form 8863 (Education Credits) until mid-February. Contrary to earlier indications, the IRS announced yesterday that they will not accept returns in which an education credit is claimed (Form 8863) at tomorrow's start of the tax season. Instead, filers must wait until mid-February to file any return that claims an education credit or includes Form 8863.
To see the official announcement, click on this link: IR-2013-10.