OUT WITH THE OLD AND IN WITH THE NEW

There is a saying in Texas that, “when the Legislature is in session no one is safe.” I think that statement may also apply to the 111th. U.S. Congress. With the flurry of tax legislation passed this year (some of it very late in the year) and the Democrats and Republicans engaged in guerilla warfare it looks like both the IRS and tax practitioners are going to be facing a very challenging tax season. For example, two bills in particular created some unfortunate consequences:

1. Affordable Health Care for America Act
2. Tax Relief, Unemployment Insurance Reauthorization and Jobs Creation Act of 2010 –better known as the 2010 Tax Relief Act.

Hidden deep in the 2,409-page Affordable Health Care for America Act was an onerous provision that will require businesses to significantly expand the number of 1099 tax forms they must file each year. Almost everyone agrees that this is bad legislation but congress has been unable to agree on a bill to repeal the provision.

The 2010 Tax Relief Act was passed so late in the year that the IRS is now saying that some final 2010 tax forms may not be available until as late as February.

Add to the two items mentioned above the IRS’s Unenrolled Tax Preparers initiative and the new Preparer Tax Identification Number (PTIN) registration regulations and I am sure that you will agree that 2011 is going to be interesting. I think what both tax practitioners and the IRS are facing in 2011 can be summed up in a quote from actress Mae West; “Hang on boys, it’s going to be a bumpy ride.”

HAPPY NEW YEAR