2014 Federal Tax Refund Delay Rumor is False, but there is Still Reason for Concern

A story from the National Journal claimed that the IRS would be delaying 2014 federal tax refunds until October 2015. The story looked entirely believable, with very plausible explanations as to how this could happen, even including quotes from White House spokesman Josh Earnest and senators Rand Paul and John McCain. The story turned out to be false, but it still set off quite a bit of panic from taxpayers who believed it. Taxes

Although the National Journal story was entirely a hoax, there are some real concerns within the IRS about the ability to process refunds next year in a timely manner. The challenges have to do with Congress’ failure to take up roughly 60 tax laws that expired at the end of 2013. Normally, tax laws that Congress intends to extend would have been taken up by now, but because of the upcoming election, it appears that nothing will be done about them until the lame duck session, which would begin in late November at the earliest. Contact a Mesa accountant for more information.

Congress and the Senate are currently in discussions about what could be included in a bill during the lame duck session. It looks like several of the expired tax provisions will be extended and made retroactive to January 1, 2014. In addition, lawmakers would like to make changes to some of these tax laws as well as address some new issues that have come up.

Here are some of the highlights to look for in a lame duck session:

  • Extension of the 50% bonus depreciation for businesses.
  • Expansion of the Research and Development (R&D) tax credit.
  • Expansion of the 179D (energy efficient buildings) credit.
  • Making several of the so-called “tax extenders” permanent.

Tax inversions are another issue that is expected to be talked about a lot during the lame duck session. This became headline news when Burger King announced that it was in talks to purchase the popular Canadian coffee shop chain Tim Horton’s in a move that is largely viewed as an attempt to capitalize on Canada’s low corporate tax rates. Though the issue has faded from the front pages, expect senators to make plenty of noise about it though it is highly unlikely any action will be taken. Tax reform is another idea with several supporters on Capitol Hill however; there is little likelihood any action will be taken.

The IRS is visibly nervous about the lack of action so far in Congress. In a letter to Senate Finance Committee Chairman Ron Wyden, the IRS commissioner warned, “this uncertainty, if it persists into December or later, could force the IRS to postpone the opening of the 2015 filing season and delay the processing of tax refunds for millions of taxpayers.”

The bottom line according to the IRS is that delayed action could indeed result in problems for tax preparation professionals throughout the country and in a tax refund delay like the one written about in the National Journal’s false story. For further updates on this issue and how it may affect your tax return, speak with your Mesa accounting firm.

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