By: T. Steel Rose, CPA | AICPA tax leadership acknowledged in a November 15 media presentation that the upcoming tax season will be a difficult one due to a compressed tax season with 57 expiring tax provisions. The presentation included AICPA leaders: Ed Karl, Vice President of Taxation, Jeff Porter, Chair on the Tax Committee and Melissa Labant, Director of Tax Advocacy.
The slew of expiring tax provisions for individuals include deductions for teachers’ out-of-pocket expenses, state and local general sales taxes, qualified tuition, and related expenses and mortgage insurance premiums. Business provisions scheduled to expire are the R & D tax credit, the work opportunity tax credit, and the active financing exceptions under Subpart F. Also, increased expensing and bonus depreciation allowances will not be available for taxpayers after December 31, 2013.
Introducing the dilemma as “our old friend Mr. Extenders,” Karl permitted Porter, a CPA who practices in Virginia, to describe a serious problem related to the not extending the Section 179 deduction and bonus depreciation.
“It affects decisions on equipment purchases now. Although provisions could be extended retroactively clients have uncertainty,” said Porter. “It could cause a $400,000 change in business deductions for one client.”
The prospects for the extension of the 57 expiring tax provisions do not exist at this time. AICPA tax expert Ed Karl responded, “the answer to the question is, ‘no’ to a CPA Magazine question asking, ‘Are any bills are being proposed by Congressional committees or have any asked for AICPA input?’” While there is no expectation for any of the provisions being extended to be effective for 2014, the compressed tax season will make things difficult for CPAs in 2014.
The IRS recently announced that the beginning of the tax filing season will be delayed one to two weeks. Labant acknowledged that this shortening of the tax season would make things more difficult for both the IRS and tax professionals.
“It [the government shutdown] caused serious workflow compression last year and is causing another problem this year, especially if there is another government shutdown [including the IRS] in January,” said Labant.
Exacerbating the problem is, “the shrinking budget for the IRS causes delays in dealing with the IRS, especially this year with the additional [3.8% investment] tax for ACA, and implementing DOMA,” emphasized Karl; adding that, “the IRS is facing an aging workforce, with training budget cuts.”
For a downloaded list of the 57 expiring provisions go to: https://www.jct.gov/publications.html?func=startdown&id=4499
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