2016 Tax Season Opens Smoothly

2016 Tax Season Opens Smoothly

The IRS officially kicked off tax season this year on January 19th, one day after the Martin Luther King holiday. This marked the first day that the IRS would accept, and begin processing, 2015 federal income tax returns. The IRS said in an official statement that they had received several hundred thousand tax returns up through mid-day and that the 2016 tax season was off to a smooth start.

I don’t know how efficiently they will be processing returns this year (they say that most returns will be processed in 21 days or less), but I can personally vouch for the smoothness of the phone lines, at least on the first day of tax season. I made a few calls on the 19th, and got through surprisingly quickly on the Practitioner Priority Line (PPL), with a similar result when calling the Automated Collections System (ACS) for some of my collections cases. January has often been a terrible time to call the IRS (especially the first half of the month) because people have been away from their offices for the holidays and when they come back it seems like everybody wants to catch up on work at the same time. It is especially bad the day after a federal holiday, so I was surprised how prepared the IRS was on day one of tax season right after MLK.

The IRS expects more than 150 million individual tax returns this year. It may go without saying, but that figure does not include business returns, and it does not include any prior-year tax returns or amended returns that the IRS receives this tax season. The IRS also anticipates that around 80 percent of all returns will be filed electronically. It is always astounding to me that this figure is not up around 99 percent yet. I just can’t imagine filing a paper tax return and don’t understand why people still do it. I suppose the hold-outs are those who like the idea of saving a few bucks (when you paper file, all you pay is the cost of postage) and those who basically want to stick it to the man. This quote I found says it all:

Why should I pay through the nose to save the government money? What rational individual wants to pay $10 or more to save the government $4?

So the IRS received hundreds of thousands of returns within the first few hours of tax season, day one. I guess that means a couple hundred thousand more will be arriving tomorrow or Friday in the post. Queue the letter openers.

2014 Tax Season: Status Check

Today the IRS released some key filing season statistics to show how they are doing compared to last year at this time.

So far the IRS has received some 49.6 million tax returns and has processed around 98 percent of them.  A vast majority of those returns were filed electronically — about 46.6 million.  If you hadn’t noticed, as much as the IRS loves sending taxpayers mounds of mail, they really do not like receiving it.  Hence the constant emphasis on e-filing.

So far the IRS has paid out over 40 million tax refunds; most of them being directly deposited.  As much as the IRS loves sending taxpayers mounds of mail, they really do not like sending paper checks.  Hence the constant emphasis on direct deposit.

One stat that always blows my mind is the average refund amount, which is now over $3,000.  I think that number tapers off as we approach the tax filing deadline since those who are eager to file early are typically the same people who expect a fat tax refund.  Personally I would rather pay what I owe in April than give the government an interest-free loan throughout the year.

And finally, the statistic that has left me wondering is the irs.gov website traffic.  This is one of the only stats that has dropped since last year.  The only other stat that is lower this year is the number of e-filed returns by tax professionals, but this is probably going to continue to drop as the number of e-filed returns prepared by taxpayers from their home computers (self-prepared returns) continues to rise.  Could the decreased website traffic mean that people are relying more heavily on tax software?  Could it mean that taxpayers are turning to the phones more than in years past?  There are a million possible explanations.

When E-Filing Isn't Fast Enough

The IRS always prefers that you file your tax return electronically.  The number of electronically filed returns continues to increase each year, and there is no question about the benefits of E-filing in terms of both accuracy and efficiency.  However, from the perspective of a tax attorney, there are definitely situations when it is better for the taxpayer to drop off a paper return at the local Taxpayer Assistance Center (TAC).

Here is just one example.  Suppose taxpayer has a delinquent 2010 tax return, and now that it is well overdue, the IRS has given him an arbitrary new filing deadline.  If taxpayer misses this deadline, the IRS has promised there will be enforced collection activity, including the possibility of a wage garnishment or bank levy.  If taxpayer finds himself right up against his new filing deadline and he files electronically, the return is not going to show up in the IRS computer system immediately and there could be trouble.  Even if the return is filed before the deadline, the IRS won’t know it, and it could quickly shut down negotiations for tax relief.  However, if taxpayer walks his return down to the local TAC, he can get the return date stamped as “received” and, providing a copy of that date-stamped return as proof, can more expeditiously get the IRS to back down on the levy threats.

At the core of this problem is the fact that the customer service people at your local TAC are ordinarily not the same people who process the returns.  The TAC people will normally have to ship returns they receive off to processing centers.  Practitioners who drop off stacks of returns at local TACs tend to overburden these walk-in offices, which can diminish the level of service given in truly urgent situations like the one described above.  The IRS is trying to eliminate this practice.  Beginning this year, the IRS will no longer accept bulk return filing at its Assistance Centers.  This will be the general rule; exceptions will be considered on a case-by-case basis.

IRS Selects New ETAAC Members

The Electronic Tax Administration Advisory Committee (ETAAC) is a 13-member panel that consults with and reports to the IRS on electronic tax administration issues. Their goal: increasing electronic interactions between tax professionals and the IRS. Past panels have consisted of professionals in the banking, technology, tax law, accounting, and tax preparation industries.

Introducing the new members:

  1. Timothy Blevins: big shot at CGI, a global business process services firm
  2. Cyrus Daftary: attorney at Burt, Staples & Maner, a Washington D.C. taxation law firm
  3. Yasmine Nolan: big shot at H&R Block
  4. Timur Taluy: CEO of FileYourTaxes.com
  5. Mark Steber: big shot at Jackson-Hewitt (selected as ETAAC Chairman for 2011-2012)

If you’re a big shot and feel you were overlooked, maybe you deserve a spot on this committee. It is too late this time around, but feel free to review the membership application for future reference. Applications are accepted each February. This is a volunteer 3-year position with a 150-hour time commitment. And they’re just looking for experience in a few key areas:

  • public policy development
  • formulating, developing, and presenting proposals for ETAAC consideration
  • e-file security experience
  • tax software experience
  • accuracy-related experience