Wednesday, January 19, 2011

IRS Scrambling to Update Computers

Because it took a contentious Congress until Dec. 17 to agree to extend the so-called Bush tax cuts another two years, the Internal Revenue Service had to scramble to update its computers.
The result is that about 40 million of the nation's 140 million filers will have to wait until mid- to late March to file their returns if they itemize deductions.
"For everyone else, there is no delay," said IRS spokesman Mark Hanson. "But if you are itemizing on Schedule A, you will have to wait until the IRS gives the green light to file."
Returns filed before itemizers get the go-ahead will be rejected and sent back, Hanson said.
Anticipating that Congresss wouldn't extend the tax cuts beyond 2010, the IRS had adjusted its computer programs to exclude them, Hanson said.
Joseph A. Pancerella, a certified public accountant, financial planner and managing partner of Pancerella & Associates LLC, 301 W. Lancaster Ave., Shillington, tried to simplify the issue.
"As the IRS has stated, most filers will not be affected," Pancerella said. "However, most individuals who use tax preparers will be affected.
"The reason: Because, as preparers, we typically prepare complicated returns. And complicated returns typically contain the items that are causing the delay."
Since the tax-filing season for some has been shortened to six weeks, Hanson said the IRS is encouraging taxpayers to file their returns electronically and, if they want to receive their refunds in as little as 10 days, they should elect to have their refund deposited directly into their checking account. Mailed refund checks take six to eight weeks.