Many taxpayers see their stress level spike as the April 15th filing deadline gets closer, especially for those who are scrambling to get their return completed on time. A number of tax law changes that took effect this year may cause confusion for certain filers but it looks like there may be even bigger problems on the horizon. According to IRS Commissioner John Koskinen, taxpayers should expect the 2015 tax season to be nothing short of “miserable”.
Speaking at the AICPA National Tax Conference recently held in Washington, D.C., Koskinen warned that cutbacks in government funding paired with a slew of new tax issues to deal with may result in one of the most complicated filing seasons on record. His comments echoed those of National Taxpayer Advocate Nina Olson who said the 2015 filing season would be the worst she’d ever experienced, rivaling the 1985 debacle in which returns disappeared altogether.
Budget issues behind filing hassles
Budget troubles are nothing new for the IRS. Currently, the agency is operating on a budget of $11.3 billion, which is roughly $850 million less than what it received in 2010. That’s a decline of 7 percent, which doesn’t seem like much but when you consider the current employee to taxpayer ratio it becomes clear how problematic the lack of funding is. Since 2010, the number of full-time employees has dropped by 13,000 while the number of taxpayers has increased by about 7 million.
At the same time the budget and workforce has declined, Congress has steadily been passing laws that the IRS is required to implement. The most visible has been the Affordable Care Act, which requires taxpayers to have health insurance unless they meet certain exclusion guidelines. According to Koskinen, the IRS asked legislators for over $400 million in 2014 to assist with this task, a request which was denied. Instead, the money was drawn from the taxpayer services and enforcement budgets, which only added to the agency’s financial woes.
Taxpayer services expected to take a hit
During the 2014 tax season, taxpayers were able to get through to the IRS via telephone about 70 percent of the time. While that marked a slight uptick over 2013, Koskinen called that amount unacceptable. For 2015, he predicted that the percentage of calls the IRS would be able to field would plunge to just 53 percent. Wait times, which already average more than 30 minutes, are expected to be dragged out even longer.
Tax filers who are overseas once the new year rolls around may have even more difficult since there’s no direct customer service line to reach a tax representative. Help is available at the U.S. Consulate offices in Germany, France, China, and the United Kingdom or by calling the International Taxpayer Service Call Center but long hold times are practically a given.
Refund delays are a possibility
Currently, there are more than 50 tax extenders worth about $85 billion whose fate has yet to be decided by Congress. Lawmakers are expected to make their final decision on whether to extend key tax breaks for individuals and business owners before year’s end. Koskinen advised that putting it off too long could throw off the pace of the whole tax season, which means millions of taxpayers could find themselves waiting even longer than usual to get their hands on refund checks.
The situation could be even worse if Congress doesn’t act before December draws to a close. In a letter to Senate Finance Committee Chairman Ron Wyden (D-OR) Koskinen wrote, “If Congress waits until 2015 and then enacts retroactive tax law changes affecting 2014, the operational and compliance challenges would be even more severe — likely resulting in service disruptions, millions of taxpayers needing to file amended returns and substantially delayed refunds.”
How to prepare
If you’re worried about how your tax filing will be affected next year, now’s the time to start planning ahead. Organizing your paperwork, reviewing your expenses to check for every possible deduction and scouting out the right tax professional to help with your return can ensure that you’re ready when the 2015 tax season gets underway.
Once you’ve filed, you can take advantage of the online services offered by the IRS, such as the “Where’s My Refund?” tool and the direct pay system to track your refund or payment status. While the prospect of having to wait a few extra weeks or even months to get your refund is anything but appealing, there’s somewhat of a silver lining. Earlier this year, the IRS announced that due to staffing and budgeting shortfalls, the audit rate had declined to its lowest point since 2005.