We just got our family’s taxes prepared today – earlier than ever – because last month we got an email from our tax preparer about the IRS delaying the 2013 tax season (and subsequently, any refunds issued!). If you’re expecting a refund this year (like us), then get your taxes filed ASAP!
I’m sharing what he wrote in his email because it’s very helpful and important information for everyone! Read on:
IRS delays 2013 tax filing season
To be fair, I cannot really blame the IRS. The Congress held us on the edge of the fiscal cliff until after the New Year. When the politicians were finally done, it was already 2013. Guess what? The IRS now has to change the tax forms and reprogram their computer systems.
Imagine preparing for a wedding when the bride and the groom cannot decide whether or not they are marrying. When they finally agree, it’s the day before the wedding. Invitations are not sent, dresses are not tailored, caterers and entertainers are not hired… What will you do? Obviously, you will have to postpone the wedding.
And this is what the IRS had to do, too. Normally, you could file your tax return around the second week of the year and receive your refund in January, in time to pay property taxes. Not in 2013. The IRS announced that they will not accept any tax returns until January 30th. It does not matter whether you want to mail a paper return or e-file – the IRS will not do anything with it until January 30th.
It gets worse. On January 30th, the IRS still won’t be ready to process tax returns containing what they called “certain forms.” The IRS reassured us that these problem forms do not affect most of the people. Sounds fine – until you realize that one of these no-good forms is depreciation form. Translation: anybody who claims depreciation on a tax return – that would be every real estate investor and every 2nd business owner – cannot file tax return even on January 30th!
So, you want to know when? The IRS does not tell, and I’m sure they do not know yet. This very well could be March before real estate returns can be filed. Ouch. I know.
Ready for more bad news? Once your tax return is finally processed and accepted, you still do not know when you will see your money. This is because of something entirely different: growing fraud and particularly identity theft. Last year, for the first time on my memory, several of my clients were victimized. It got so bad that the IRS decided to reverse gear and err on the side of caution.
Previously, the IRS would process the vast majority of the returns very quickly, especially the e-filed ones, and you could have a refund deposited into your bank account in 10 days. When something looked suspicious, the IRS would often try to investigate after the fact, when the refund has already been issued and the money gone forever. Needless to say, they did not recover much of the stolen money.
This year, it’s the other way around. If the IRS computer smells something funny, the IRS will NOT issue you a refund until they investigate and make sure the refund is legit. I’m quite skeptical that they will succeed in catching a lot of bad guys. However, I’m almost positive that they will succeed in delaying tons of refunds for the good guys.
For the 1st time in recent years, the IRS refused to publish their e-file processing schedule. In other words, they’re saying: we make no promises when we will pay you this year. Just sit and wait. (emphasis mine)
From these unpleasant developments, I urge you to adopt these four conclusions:
1. Do not plan on receiving your tax money soon. If you counted on your IRS refund for some urgent cash needs, better make alternate plans quick.
2. Be extra careful choosing your tax help this year. Many crooks will try to tell you that they can get you your money faster. They cannot. It’s not in their power. Beware of these scammers and seek quality help.
3. Give your tax data to your tax preparer ASAP! This advice may seem strange, considering the returns are not yet accepted by the IRS, and depreciation will not be processed until much later. However, it is even more important to start early this year. Why? Because, once the IRS opens the gates, we tax preparers will be instantly swamped, like never before. You want to have your return ready (or at least almost ready) BEFORE the flooding starts.
4. Stay tuned. Things will keep changing this year. Keep up to date with current news and any updates your tax preparer may have.
(some edits made by me)