Fiscal Cliff

The IRS in limbo as fiscal cliff debate continues

Eve Troeh Jan 1, 2013

CORRECTION: A previous version of this story incorrectly spelled Katie Pratt’s name. The text has been corrected.

The IRS is one of the agencies most affected by the fiscal cliff. Without a deal, the 2013 tax season is going to be tumultuous.

Los Angeles accountant Jeffrey Otto says the calls have been fast and furious. “It all boils down to: What the heck is gonna happen?” Otto says. He doesn’t know.

The Alternative Minimum Tax , the estate tax — it’s all still up in the air. So Otto and his clients have focused on what they can control, cramming income and assets onto the books for 2012.

Otto says it’s no use calling the IRS for help, anyway. “Their computers are down for maintenance,” he says.

Tax scholar Katie Pratt at Loyola Law School says, with 90,000 employees, the IRS is not a nimble operation. It takes weeks to re-program its computers, and print new forms. And the IRS may not be ready to process returns until March, meaning crunch time gets shorter and way more crunchy.

“March 20 to April 15 crunch, unless Congress extends the deadline for filing, which would be unprecedented,” says Pratt.

She says uncertainty makes the IRS more, well, taxed. With less time to do the same amount of work, things slip through the cracks.  And that leads to more tax fraud.

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