Thursday, September 11, 2008


Dealing with the Internal Revenue Service on an individual 1040 issue continues to quite often be a long and frustrating process.

However I do believe in giving credit where credit is due. The IRS certainly deserves kudos for how it has responded to problems and challenges thrust upon it by the cafones in Congress over the past few years.

In 2006 Congress waited until after the IRS had to go to press with the final 2006 tax returns and instructions before it passed an “extender” bill. The Service had to create and publicize special rules for how and where to report such popular tax adjustments and deductions as educator expenses, tuition and fees, and the option do deduct state and local sales tax instead of state and local income tax, and deal with the multitude of resulting errors and omissions.

In 2007 Congress sat on its collective hands again, this time until the day after Christmas, before passing the annual AMT “patch”, which held up the processing of many 2007 individual income tax returns.

And then in 2008 Congress, having seen what a mucking fess mailing out rebate checks resulted in the first time they tried it, decided in their infinite wisdom that it would be a good idea to do it again!

In all three situations the Internal Revenue Service took on the unnecessary (if Congress had any brains) additional workload and truly shined. And they did so with minimal affect on the normal IRS functions – except in the case of the recent economic “stimulus” rebate check program when they were forced to take personnel away from the collection function to deal with the mess, ultimately costing the US Treasury hundreds of millions of dollars in uncollected back taxes.

Congress is back from its summer recess, a brief return before another recess so they can go out and campaign. Let us hope they do not repeat prior year FUs and pass an extender bill and an AMT patch before returning home. The IRS will already have its hands full next tax season with the no doubt millions of errors on 2008 tax returns it will have to deal with because of the “stimulus” rebate credit.

1 comment:

Anonymous said...

I am surely waiting for the errors to come flying in because of the “stimulus” rebate credit and agree that in all it won’t really be the IRS’s fault. Things like the above named “rebate” or “one time tax credit” need more planning, to avoid less screw ups. I prided myself for keeping up with “stimulus” movement. And advised those client who qualified to anticipate issues and those that didn’t qualify to be glad they will avoid the issues. The “AMT patch” held up 73 of my clients. The “extender” bill held up 27 clients (more for me to make sure what was going on). 81% of my clients qualified for the stimulus and I just know something is going to go wrong.