IRS Announces Date to Start Processing Delayed Returns

JANUARY 21, 2011

The IRS announced that it plans to be able to start processing tax returns delayed by the late enactment of the 2010 Tax Relief Act on Feb. 14.

On Dec. 23, the IRS warned that because of the late enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (PL 111-312), which extended various expired provisions, it would need time to reprogram its systems and update Schedule A. As a result, taxpayers who itemize deductions on Schedule A and those who take certain extended deductions would not be able to file their returns at the start of tax season. See “Tax Law Changes Will Delay Start of Filing Season for Some Taxpayers.”

The IRS announced that beginning Feb. 14, it will start processing both paper and e-filed returns claiming itemized deductions on Schedule A, the IRC § 222 higher education tuition and fees deduction on Form 8917, and the up to $250 deduction for elementary and secondary school teachers under IRC § 62(a)(2)(D).

However, in its announcement, the IRS says that “many major software providers have announced they will accept these impacted returns immediately.” The software vendors will hold onto affected returns and submit them once the IRS opens its system to accept them.

The IRS did not announce when it will start accepting other forms delayed due to changes made by the Small Business Jobs Act of 2010 (PL 111-240), including:
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Form 3800, General Business Credit;
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Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands (if certain credits are claimed);
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Form 5405, First-Time Homebuyer Credit and Repayment of the Credit (page 2 only);
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Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit;
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Form 8689, Allocation of Individual Income Tax to the U.S. Virgin Islands (if certain credits are claimed);
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Form 8834, Qualified Plug-In Electric and Electric Vehicle Credit;
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Form 8844, Empowerment Zone and Renewal Community Employment Credit;
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Form 8910, Alternative Motor Vehicle Credit; and
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Form 8936, Qualified Plug-In Electric Drive Motor Vehicle Credit.

‘Tis the Season for Catching Tax Scofflaws

By CATHERINE RAMPELL

If your fear of getting caught for tax fraud starts to spike in the next few weeks, it’s probably by design. The Internal Revenue Service appears to deliberately ramp up publicity of its tax

Stuart Rohatiner, CPA, JD

 fraud cases just before Tax Day, a new study finds.

The paper, by Joshua D. Blank and Daniel Z. Levin, looked at press releases issued by the Department of Justice’s Tax Division from 2003 to 2009 in which the agency announced a civil or criminal tax enforcement action against a specific taxpayer identified by name. They found that the number of press releases issued by the I.R.S. per week more than doubles in the fortnight preceding April 15 compared to the rest of the year:

The authors suggest that this trend is probably part of the I.R.S.’s fraud deterrence strategy:

By presenting individual taxpayers with vivid examples in which the I.R.S. has detected tax fraud — whether it involves a popular celebrity’s phony business deductions, a high-profile banker’s offshore bank account or a local tire salesman’s underreporting of gross  income — the government may provide an individual taxpayer with available images that showcase the I.R.S.’s detection capabilities. Because the government consistently provides more of these images to individual taxpayers during the weeks leading up to Tax Day than it does during other times of the year, individual taxpayers may draw upon these available images as they teeter on the decision to claim questionable tax positions on their annual individual tax returns. … In reality, a rational individual taxpayer should recognize that the chance that the I.R.S. will detect and challenge a claim of an illegitimate tax position is very low (1.03 percent in 2009).