Tax Prep Business - Effects of IRS Delays

This tax season started off with a bang, or rather, a blank in the barrel. Less than 24 hours into tax season, the IRS's e-file system went down for 18 hours causing an unexpected delay and back log for all the returns filed before the system went down and for those returns attempted to be filed during the down time. This delay seems to have set the stage for the remainder of filing season. Long processing times, delays in refunds, and lack of information have made this tax season difficult for everyone and painful for many.

Long processing times and delays in refunds have cause many taxpayers to wonder what is going on with their money. Many taxpayers rely on their refunds to pay bills that have been piling up through the winter, new bills that they are receiving, not to mention the basic necessities of life: groceries, doctor visits, gas, etc. We have seen many taxpayers ringing phones off the hooks, visiting offices of their respective preparers, and getting angry due to the inconvenience, which, to some, is a great deal more than just an inconvenience.

Not only have these delays caused problems for the taxpayers, but the preparers are feeling the effects of this problem as well. Taxpayers have been reported to be harassing their preparers over their refunds, when the preparer has no authority or capability to do anything once the IRS has accepted the taxpayers return. Having said that, the one resource available to all is the IRS's Where's My Refund system on the IRS's website, which gives an immediate acknowledgement of having the return and an expected date for which the taxpayer can expect to receive funds. Unfortunately, this application has only added more headaches this year. For a period of about 2 weeks or more (approximately), this application was not working properly, which takes away any ability of the preparer to inform and update the taxpayer on the status of his return. Not only was it not working, it appeared to be working, giving the taxpayer or preparer incorrect information only adding to the confusion.

To this day, many taxpayers are still without their refunds, and preparers are still without answers for them. Being told to wait is not appeasing; in fact, it can be infuriating for all involved in the tax preparation industry. Perhaps, given the early-on problems with the PTIN application system and the delays in the issuance of EFINs, we should have expected the worst, but we did not. We expected some consistency and reliability in our tax system. Perhaps, with the proposed 1.3 billion increase in the IRS's budget, the good folks at the IRS can develop a system that functions more efficiently and effectively.