TCJA brings on rise in tax return extensions

Posted on Monday, May 6, 2019 by Abby Draper

Jar with coins that says "Pay as you wish" on the front.

By Rebecca Kerr, OSCPA communications intern

As many accounting and tax professionals know, tax season is a stressful time for all involved parties. This season might have been even more stressful, however, due to how the Tax Cuts and Jobs Act (TCJA) has caught many taxpayers off-guard.

According to an Accounting Today article, “a report from the Taxpayer Advocate indicates that responses on the IRS taxpayer hotline are fewer, slower and less accurate” this year than in years past. Unfortunately, it appears this trend might persist.

Due to this heightened confusion and new changes brought on by the TCJA, more people have considered filing for an extension, which gives taxpayers six additional months to get their paperwork in order and filed (by October 15).

However, according to Washington Post, what taxpayers who apply for this often fail to realize is that the extension does not warrant a postponement of their payments, only extra time to file their return paperwork. Eric Smith, a spokesman for the IRS, told the Washington Post they expected an incredible 14.6 million or more extension requests this tax season.

This is a huge number in comparison to the average number of business tax extensions, which is about 5.5 million a year, as reported on the website.

As the biggest change in tax since 1986, the TCJA has clearly thrown many taxpayers for a loop. According to Market Watch, the reform in 1986 taxpayers “more than a decade to fully understand and implement.” They believe part of this widespread confusion around the TCJA and tax filing can be attributed to both the new amendments themselves, as well as the 35-day partial government shutdown earlier this year.

Although experts recommend that the majority of people choose not to opt for an extension, Forbes outlined a number of instances in which it would be a beneficial option, such as:

- Your forms arrived late

- Your accountant is busy

- You need more time to get your paperwork in order

- You want to avoid failure-to-file penalties

It’s hard to say how long it will take taxpayers to feel fully comfortable with the new tax regulations this time, but it is evident the TCJA will continue to make waves in tax filing (and extensions) for the foreseeable future.

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