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Fiscal cliff rewrites the calendar for the IRS

Tax forms from previous years are displayed. In a new experiment, researchers will track a TurboTax reminder that urges taxpayers to save refunds.

Think of the IRS as a huge ship slogging through a sea of red tape. The captain sends out an order: Turn the ship around! We’re headed for an iceberg. Or maybe a fiscal cliff.

It’s going to take some time for the good ship IRS to plot a course that includes 2012 tax changes in the fiscal cliff deal, says Scott Hodge. He heads the Tax Foundation, a Washington think tank.

“The IRS is a very inefficient, bureaucratic and slow-to-move operation,” he says.

But Hodge says, as fun as it is to bash the IRS, it’s not entirely to blame. Hodge says the White House and Congress dragged out the fiscal cliff debate, making the IRS scramble now to re-program computers and print forms.

Len Burman is an economist and tax expert at Syracuse University. He says there’s a good reason the IRS is taking some extra time.

“The people at the IRS are very risk-averse because if they make a mistake there’s hell to pay,” Burman explains.

So the IRS says it won’t start accepting tax returns until Jan. 30 -- eight days later than usual. John Hewitt is founder of Liberty Tax preparers. He says tax refunds will now be delayed by about eight days. That could hurt filers who diverted money to holiday expenses, counting on their refunds to cover their bills.

“So they’ll have more penalties in terms of bad checks, late rent, late automobile payments, etc., etc.,” he says.

Because, even if the IRS gives itself an extension, we still have to pay on time.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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