This week IRS Commissioner John Koskinen warned about the likelihood of a difficult tax season. It's a movie many taxpayers have seen before, as an understaffed IRS tries to administer an overly complicated tax code.
This year's tax-filing season began with lots of taxpayer frustration with the IRS due to cumulative cutbacks in customer service. We discussed those concerns in our February 5 post.
In today's post, we will discuss why this year's tax season may be even worse.
One reason for this is the complicated nature of compliance with the Affordable Care Act (ACA). Congress has made the IRS a key implementing agency for the sweeping health insurance legislation it passed a few years ago.
The IRS is responsible for enforcing the so-called individual mandate under the ACA. The agency is also responsible for administering tax credits available under the new law.
There is also another sweeping new law that is now coming into effect and is complicating tax filing for many taxpayers. That law is the Foreign Account Tax Compliance Act (FATCA).
The ACA and FATCA are two very large icebergs. But there are also numerous time-limited provisions in the sprawling tax code that Congress may or may not extend or modify. This makes it hard for the IRS to get the right forms in place to administer the provisions when filing season gets underway.
And then there is the issue of the cuts in customer service at the IRS. As we discussed most recently in our August 26 post, budget pressures have continued to curtail the capacity of the IRS to offer effective services to taxpayers.
This may again cause considerable frustration in taxpayers seeking help from the IRS in complying with tax laws.
Source: Journal of Accountancy, "Filing season complications loom, IRS commissioner tells AICPA," Nov. 4, 2014