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New Tax Law Changes Cause Delay in Early Filing

As you know by now, Congress passed new tax legislation in late December, 2010.  The Internal Revenue Service has announced that it is still scrambling to reprogram its computers to handle the income tax deductions extended by the last-minute legislation - a process the agency says could take until late February.  That means certain taxpayers, notably those who itemized deductions on Schedule A, will not be able to file returns until the system is ready. 

The delay also will affect those claiming the deduction of as much as $4,000 for college-education tuition and fees, or the educator-expense deduction of as much as $250 for out-of-pocket costs incurred by kindergarten-through-grade-12 teachers.

While there are about 50 million taxpayers who itemize their taxes on Schedule A, the IRS believes that, based on historical filing patterns, less than 9 million taxpayers will end up being impacted by the delay.

Alpern Rosenthal's Larry Sipos, director of tax operations and a tax shareholder, suggests that clients should still forward the information used to prepare their tax returns as soon as possible so that the returns can be started and made ready for filing - pending the IRS notification that it can accept the returns.

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