The voices of Tax Policy Center's researchers and staff
If you’re among the one-third of taxpayers who itemize deductions on their federal tax returns, the IRS says you can take your time filing your 2010 tax return. Or rather you have to take your time. The IRS won’t let itemizers (or people who claim either the college tuition or educator expense deductions) file until mid- to late-February. Why? Because Congress didn’t pass the 2010 tax act until mid-December. The IRS needs time to reprogram its computers to accommodate new tax rules—actually old rules since the tax act mainly extended last year’s law through 2012.
The situation echoes another a few years back when Congress waited until late December to “patch” the alternative minimum tax for 2007 returns. The patch boosted the AMT’s exemption and extended applicable credits, thus sparing more than 20 million taxpayers from owing additional tax. But the 4 million taxpayers still subject to the tax had to wait more than a month while the IRS rewrote its computer programs.
The IRS made sure that wouldn’t happen again this year. When the chairmen and ranking members of the Ways and Means and Senate Finance Committees told IRS Commissioner Doug Shulman back in November that they would patch the AMT for 2010, Shulman had his programmers update their computers with the promised—but not enacted—fixes. Fortunately, Congress followed through so taxpayers who owe AMT for 2010 can file whenever they’re ready—unless they want to itemize their deductions, which, of course, virtually all of them will.
Delaying tax filing is only the most tangible result of last-minute and temporary tax legislation. Over the past decade, the federal individual income tax has changed every year. Congress legislated some of the changes far in advance, but others popped up right before—or sometimes after—the new tax year started. People can’t plan when they don’t know which tax laws will apply. And they waste a lot of time and effort adapting to and complying with ever-changing rules.
The delay won’t affect procrastinators but people like me who want to file as soon as they have all of their W-2s and 1099s for the year won’t like it. I’m lazy about adjusting withholding to match my expected tax liability—it’s easier to use a safe harbor that overwithholds—so I typically get a large refund. But having already given the government a zero-interest loan during the year, I want my refund as soon as possible (in recent years so I could pay my daughter’s latest tuition bill). This year’s refund will come later than usual. Fortunately I’ve paid my last tuition bill so I can afford to wait. But there’s still the principle of getting that refund quickly.
Those of you who pay estimated taxes and haven’t already made your January payment might want to trim that payment back if you expect a refund. On the other hand, sticking with a safe harbor saves your doing the arithmetic needed to make sure you won’t get hit for underpayment.
There is one bit of good news: Because the IRS resides in the District of Columbia, which celebrates Emancipation Day on April 15 this year—a Friday—tax returns aren’t due until April 18. Itemizers may have to wait many weeks before the IRS will let them file their returns, but they’ll have three extra days to mail them.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.