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Tax season begins on January 19

IR 2015-139

Despite the last minute, year-end tax extender legislation signed into law last week—which retroactively extended 50 or so “extender” provisions, modifying or making many permanent (or both) and added a number of non-extender provisions—IRS announced that tax season will begin as scheduled on Tuesday, Jan. 19, 2016.

Background. On December 18, Congress passed and the President signed into law the “Protecting Americans from Tax Hikes (PATH) Act of 2015” and the “Consolidated Appropriations Act, 2016,” providing a number of significant tax changes and funding the government through September 2016.

The PATH Act retroactively extends 50 or so taxpayer-favorable tax “extenders”—temporary tax provisions that are routinely extended by Congress on a one- or two-year basis, that had been expired since the end of 2014. It made permanent more than a dozen individual and business extenders (including the enhanced child tax credit, American opportunity tax credit and earned income tax credit; parity for exclusion from income for employer-provided mass transit and parking benefits; the deduction of State and local general sales taxes; the research credit; and 15-year straight-line cost recovery for qualified leasehold improvements qualified restaurant buildings and improvements, and qualified retail improvements). It also contains a delay in the Code Sec. 4191 2.3% excise tax on medical devices and provisions on Real Estate Investment Trusts (REITs), IRS administration, the Tax Court, and miscellaneous other tax rules.

The Consolidated Appropriations Act includes: a delay of the Code Sec. 4980I 40% excise tax on high cost employer-sponsored health coverage (i.e., the so-called “Cadillac” tax), a one-year suspension of the annual fee on health insurance providers, and the extension and phaseout of credits for wind facilities, the election to treat qualified facilities as energy property, the solar energy credit, and qualified solar electric & water heating property credits. That Act also contains a provision that gives independent oil refiners a favorable way of accounting for transportation costs in calculating their Code Sec. 199 domestic production activities deduction.

For a Special Study that explains key individual tax breaks in the Act, see ¶ 50.

For a Special Study on the key business tax breaks in the Act, see ¶ 52.

For a Special Study on the depreciation and expensing provisions in the Act, see ¶ 53.

For a Special Study on the energy provisions in the Act, see ¶ 55.

For a Special Study on the REIT reforms in the Act, see ¶ 57.

For a Special Study on miscellaneous non-extender provisions in the Act, see ¶ 48.

For a Special Study on IRS administration and Tax Court provisions in the Act, see ¶ 28.

For a Special Study on the tax provisions in the 2016 Consolidated Appropriations Act, see ¶ 2.

Open season. In IR 2015-139, IRS said that it will begin accepting individual electronic returns and paper returns on Tuesday, Jan. 19, 2016.

Although IRS begins accepting returns on January 19, many tax software companies will begin accepting tax returns earlier in January and submitting them to IRS when processing systems open. IRS noted that there is no advantage to people filing tax returns on paper in early January instead of waiting for e-file to begin.

IRS expects to receive more than 150 million individual returns in 2016, with more than four out of five being prepared using tax return preparation software and e-filed. IRS reminded taxpayers that e-file and direct deposit for refunds remains the fastest and safest way to file an accurate income tax return and receive a refund, and that this season IRS anticipates issuing more than nine out of 10 refunds in less than 21 days.

IRS reminded taxpayers that a trusted tax professional can provide helpful information and advice about the ever-changing Code. IRS also noted that

…70% of taxpayers are eligible for IRS Free File. IRS’s commercial partners offer free brand-name software to about 100 million individuals and families with incomes of $62,000 or less;
…Online fillable forms provide electronic versions of IRS paper forms that can be prepared and filed by people comfortable with completing their own returns. They are available to all taxpayers regardless of income; and
…The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) offer free tax help to people who qualify. Taxpayers can learn more about or find a VITA or TCE site near them by going to irs.gov and entering “free tax prep” in the search box. Or taxpayers can download the IRS2Go app on their smart phone and find a free tax prep provider.

For most taxpayers, the filing deadline to submit 2015 tax returns is Monday, Apr. 18, 2016, rather than the traditional April 15 date. This is because Washington, D.C. will celebrate Emancipation Day on Friday, which will push the deadline to the following Monday. For taxpayers in Maine and Massachusetts, the deadline is Tuesday, Apr. 19, 2016, because of Patriots Day.

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