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Brush Up on Expiring Tax Provisions, Experts Warn

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Tax experts are warning advisors to be aware of the 57 federal tax provisions that are expiring at the end of the year, which include the deduction for state and local sales tax, the above-the-line deduction for tuition and tax-free distributions from IRAs for charitable purposes.

The “on-again, off-again nature of expiring provisions creates a lot of uncertainty,” said Jeff Porter, chairman of the American Institute of Certified Public Accountants’ tax executive committee, on a Friday call.

Edward Karl, vice president of taxation for the AICPA, noted on the call with reporters that as it stands now, it doesn’t look like there’s any “impetus in Congress to move a separate extenders bill,” even though AICPA would like to see one.

“We don’t know the ultimate decision that [Congress] will make — whether they extend them or allow them to completely expire — but my better sense is they won’t be doing any tinkering with them,” Karl said. “It will either be extended or not.”

The extenders — a term that is interchangeable with expiring provisions — “for this year won’t impact filing season, but will impact decision making,” Karl said.

Melissa Labant, director of AICPA’s tax advocacy, said on the call that practitioners should gear up for yet “another difficult filing season.”

Last winter, Labant said, “we had late congressional action and a late start to filing season, then we had a 16-day government shutdown during October filing season, which meant CPAs were unable to talk to anyone at the IRS, during one of our busiest times of the year.”

As it stands now, she continued, “we’re looking at a one- or two-week delay in the upcoming filing season. I would strongly urge the IRS to start the filing season as early as possible.”

Workload compression, Labant continued, “is already a challenge for our profession today, and I’m concerned that a government shutdown in January, even if only for a day or two, may push back the already delayed start to filing season.”

Said Labant: “Hopefully the IRS is anticipating and preparing now for a possible government shutdown in January, just in case.”

In October, the IRS announced that filing season would be delayed at least a week, starting Jan. 26, but possibly two weeks, until Feb. 4. The IRS hopes to announce more specific dates in December, Labant said.

The IRS, she said, is supposed to decide in December when to start the filing season. The IRS has scheduled a meeting with stakeholders, including AICPA, next week, Labant said, at which time “I hope we’ll have more specific information about [the IRS’] plans for the upcoming filing season.”

Labant said that “at this point we’re hoping it’s only a one- or two-week delay [in the filing season], but we won’t know this until we find out whether there is a government shutdown in January.”

Check out 10 Best & Worst Tax States for Retirees on ThinkAdvisor.