Late tax law changes push start of season back

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Jeannette Benbow, office manager and registered tax return preparer works Monday in H & R Block at the Cherryland Center in Traverse City. Record-Eagle/Keith King
A sign displaying that the Internal Revenue Service (IRS) will begin processing tax returns on Jan. 30 is displayed Monday at H & R Block at the Cherryland Center in Traverse City. Record-Eagle/Keith King

January 15, 2013

Late tax law changes push start of season back

BY KATHY GIBBONS kgibbons@record-eagle.com The Record Eagle Tue Jan 15, 2013, 07:14 AM EST

TRAVERSE CITY — Taxpayers who plan to file returns early will find that early is later than they expected.

The Internal Revenue Service delayed the start of tax filing season to Jan. 30, eight days later than originally scheduled. The delay stems from the Jan. 2 enactment of tax law changes to avert the "fiscal cliff."

"Due to the late tax law changes, we're recalibrating our systems," said Luis D. Garcia, spokesman for the IRS in Michigan. "We usually have many months to bring all of our systems up to speed in preparation for the tax season, but in light of the very late changes, we're working around the clock to make sure it starts as soon as possible."

That delay could be a hardship for some taxpayers.

"A lot of clients, they depend on getting that refund as quickly as possible as soon as they can file because we're coming out of the holidays and winter season," said Jeannette Benbow, office manager for H&R Block at the Cherryland Center.

If the IRS isn't going live until Jan. 30, she said, early filers could see delays of up to two weeks on refunds.

Robert Klein, senior accountant at Gabridge Wilson CPA in Interlochen, said filing could even take longer this year.

"A lot of forms aren't going to be acceptable or in their final state until mid-February," he said. "Depending on the client ... it all depends on their deductions that they're taking.

"If they're taking some special credits, some of those forms may not be ready until mid-February, which means our tax season becomes much shorter than normal — a month shorter."

The Jan. 30 start date is tentative, Garcia said.

"There may be some unforeseen reason we have a delay," he said.

That's not the only surprise in store for Michigan taxpayers. Roger Suppes, tax program coordinator for the Northwest Michigan Community Action Agency, said several changes in tax rules are likely to hit filers where they live: their pocketbooks.

The agency provides tax preparation assistance to income-qualified individuals in a 10-county area of northern Lower Michigan, the very group that is likely to see a reduction in refunds because the earned income tax credit is going from 20 percent to 6 percent.

"Anybody that's working that makes somewhere as a single person in the mid-$20,000 range, they would be affected," Suppes said. "If you got an earned income credit of $1,000 from the IRS last year, you would have gotten $200, or 20 percent of that, from Michigan in a refundable credit. This year, it's been reduced to 6 percent, so your $200 is going down to $60. That's 140 bucks.

"For somebody in a lower-income bracket, that's a pretty good chunk of money."

In the past, senior citizens in Michigan received a special exemption. No more, Suppes said.

"Anyone 65 or older, the additional exemption they would get ... has been eliminated," he explained.

The homestead property tax credit and home heating credit also will be figured differently in Michigan. Previously it was based on household income; that's been changed to total household resources. Also, homes with taxable value of more than $135,000 will be excluded.

"For the state of Michigan, the homestead property tax, the people eligible for that has been decreased quite a bit," Klein said.

There are other changes that will affect different taxpayers in different ways, some not even entirely clear to the experts yet.

"We actually have a meeting Saturday the 19th in Cheboygan," Suppes said. "A fellow from the state of Michigan is gong to put on a presentation going over these issues.

"There's so much confusion about it right now ... It'll affect all of us, it really will."

It's possible the IRS will extend the filing deadline beyond April 15.

"Right now it all depends on if we're able to make sure that everybody can be processed properly and in a timely way," said Garcia. "As it is right now, we're not going to say one way or the other."

As for how long refunds might take this year, Garcia said that's unclear.

"Generally, if you file electronically and you request direct deposit, it's anywhere between 10 to 21 days to receive a refund," he said. "As of right now, I can't say."