Why Avoiding the ‘Fiscal Cliff’ May Have Caused Increased Risks to CPAs

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We avoided the fiscal cliff. That is old news and, for most Americans, it is also good news.  But, the developing fallout and the impact of Congresses’ eleventh-hour solution has particular implications on accountants gearing up for tax season. On January 2, 2013 Congress enacted the American Taxpayer Relief Act of 2012; a fiscal cliff tax package whopper which effectively changed the rule-book. At a time of year when accountants across the country are typically saying “so long” to their families to prepare for the hibernation that is tax-season, this year’s crop of tax-preparers is stuck in its tracks waiting for the IRS to issue updated software. From a professional liability and risk management standpoint, this is troublesome.

The IRS has already announced that it will delay accepting all 2012 returns by a few days.  The filing deadline of April 15, however, remains in place. According to Jackson Hewitt, while the IRS did as much programming as they could in anticipation of the fiscal cliff solution, “the IRS was unable to finalize their programming and complete their testing until the bill was signed.” For example, those tax-preparers with clients seeking education credits, residential energy credits, fuel credits, and many others have no choice but to wait for the IRS to complete its due diligence.

The IRS promises to provide a specific date when the materials will be ready “in the near future” and “as quickly as possible.” In the meantime, tax-practitioners are waiting for the storm.  This is a most unwelcome development for tax-preparers nationwide who are used to the stress of tax-season but can ill-afford additional wrinkles. The implications of this delay is that many tax-preparers must complete various returns within a smaller window.  Haste makes waste and waste makes for professional negligence. In all tax-seasons, and particularly this one, tax-preparers must summon up that extra ounce of patience to properly evaluate the new forms and to carefully process each return.