IRS ‘committed’ to returns
The Internal Revenue Service will process tax returns beginning Monday and provide refunds to taxpayers as scheduled.
“We are committed to ensuring that taxpayers receive their refunds notwithstanding the government shutdown. I appreciate the hard work of the employees and their commitment to the taxpayers during this period,” IRS Commissioner Chuck Rettig said before the goverment reopened.
Congress directed the payment of all tax refunds through a permanent, indefinite appropriation, and the IRS has consistently been of the view that it has authority to pay refunds despite a lapse in annual appropriations. Although, in 2011, the Office of Management and Budget directed the IRS not to pay refunds during a lapse, OMB has reviewed the relevant law at the Treasury’s request and concluded that the IRS may pay tax refunds during a lapse.
The IRS has recalled a significant portion of its workforce, which had been furloughed as part of the government shutdown, to work.
Local tax preparers said the government shutdown didn’t have a major impact on their business.
“It has not affected us at all; that’s why people are filing now. I have done about 30 already but can’t e-file them until Monday,” said Louann Hoffman, broker, owner and tax preparer at Lang Real Estate and Tax Service in Cresson.
“From the return preparation standpoint, it is business as usual. We can prepare them and can electronically file and submit them to the IRS,” said Patti Hudson, shareholder and head of the tax department at Wessel & Co., Johnstown. “For taxpayers, they don’t know when their returns will be processed or when their returns will be issued.”
Mike Cominsky, senior analyst and H&R Block franchise owner in Altoona, said it is “business as usual.”
“On Jan. 7, the IRS announced it would follow the government plan and accept returns Monday and process refunds. We don’t see any impact. They called back a lot of the people on furlough,” Cominsky said.
James S. Frederick Tax and Accounting Services, Roaring Spring, is seeing 80-90 percent of its normal business.
However, the government shutdown is causing some problems.
“The IRS is not answering the telephone, I am an enrolled agent, I can talk to the IRS and solve a lot of problems for my clients. They are not processing amended returns. If you need to amend, they are sitting there. When the shutdown is over, there will be a huge pile of amended returns to process. There will be quite a backlog,” said Nicole Frederick, enrolled agent.
“The other thing they are not doing is conducting audits or examinations of returns; that may be a positive or a negative. It does not affect me because I don’t have anyone under audit,” she said.
“The biggest problem is we can’t call the IRS with any questions, there is no communication with the IRS at this point,” said accountant David Scott, a partner with Young, Oakes, Brown & Co., Altoona.
Melinda Fellabaum, franchisee for Jackson Hewitt Tax Service in Altoona, sad she is trying to keep things “business as usual.”
“We are encouraging them to file. Whoever files first will get their refunds first,” Fellabaum said.
The government shutdown may have an impact on when taxpayers receive their refunds.
“My opinion is the shutdown will affect how soon people get their refunds. Clients are afraid, they need their money, it is quite frightening. I feel some clients understand and some don’t. I think it will delay things,” Hoffman said.
“The government has said they don’t want to impact processing or refunds because of what it does for the economy. The process started a week later this year, so people may receive refunds one week later,” Fellabaum said.
Scott said he is not sure if the shutdown will impact refunds.
“Most people won’t file until February and hopefully this will be over by then,” Scott said.
Many changes face taxpayers as a result of the tax bill which took affect Jan. 1, 2018.
For individuals, the law generally lowers rates across income levels. It retains the number of tax brackets — seven — but changes the rates that apply to particular income levels. For a couple filing jointly, the brackets are 10 percent for taxable income up to $19,050, 12 percent on $19,050 up to $77,400, 22 percent on income to $165,000, 24 percent up to $315,000, 32 percent to $400,000, 35 percent to $600,000 and 37 percent on income above $600,000.
The standard deduction has increased significantly.
The bulk of Americans don’t itemize their tax deductions. They instead benefit from claiming the standard deduction. Under the law, the standard deduction roughly doubled to $12,000 for individuals and $24,000 for couples. As a result, a greater share of these taxpayers’ income will be shielded from tax. And because of the new cap on itemizing state and local tax deductions, households that previously itemized may now fare better by taking the standard deduction.
Local preparers are advising people to file early.
“Go ahead and get it done. If people are filing on their own, there have been a series of changes. Be careful if you do it on your own. The government said they have made it simpler, but they added six forms. There are additional forms added to the short form,” Fellabaum said.
“We have a new tax bill. There are several things on the tax code, some people are affected and some are not. Consult with your tax preparer to make sure you are taking advantage of all things under the new tax code that may pertain to you as a taxpayer,” Frederick said.
Hoffman may have the best advice.
“Don’t wait, come to your tax preparer and hope for the best,” Hoffman said.
The filing deadline to submit 2018 tax returns is April 15 for most taxpayers. Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17 to file their returns.
Mirror Staff Writer Walt Frank is at 946-7467.