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'Disaster' looms for 2013 tax season

Lawmakers have put off major tax decisions, including whether to continue the Bush tax cuts, until after the Nov. 6 election. That doesn't leave much time to make changes.

By Teresa Mears Apr 5, 2012 5:42PM

You think this tax season is difficult?

 

Next tax filing season could be a "real disaster," IRS Commissioner Douglas Shulman said Thursday, if Congress doesn't make key tax decisions before Jan. 1.

 

"You could have a real disaster in the filing season where there is total confusion," Shulman said during a speech at the National Press Club.

 

Members of Congress strongly disagree on tax policy and most have agreed to put off any substantive changes until after Nov. 6 elections. That doesn't leave much time to make decisions and revamp IRS procedures before the traditional Jan. 1 beginning of tax season.

 

And there are a lot of decisions to be made.

  • The tax cuts exacted in 2001 and 2003 under President George W. Bush will expire at the end of 2012 unless Congress votes to extend them. Tax rates also will rise. (Post continues after video.)
  • The Social Security payroll tax cut that lawmakers extended earlier this year after some resistance expires Dec. 31.
  • The alternative minimum tax patch, a perennial congressional favorite, expires at the end of the year. If Congress takes no action, millions of Americans will face a take hike next year.
  • Lawmakers may want to renew some tax breaks that have already expired.
  • Whoever is elected president is likely to have some new tax initiatives.

Both President Barack Obama and his GOP rivals have expressed a desire for changes in the tax system, but neither side can muster the votes in Congress for a specific plan now. Whether the votes are there after the election is anyone's guess.

 

This year's tax filing season was able to go forward with little trouble because Congress didn't make any substantive changes at year's end. But the previous year, some taxpayers had to wait for the IRS to conform to late-breaking changes in the law and couldn't file their returns until mid-February.

 

In his prepared remarks, which focused on improvements made at the IRS in recent years, Shulman also noted that the agency relies on some technology dating from the 1960s and spends less than 3% of its budget on improvements to its technology infrastructure.

 

More from MSN Money:

VIDEO ON MSN MONEY

85Comments
Apr 6, 2012 2:03PM
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Get rid of big government.  They need to start living like the majority of Americans do.  Most American taxpayers live paycheck to paycheck struggling to just get by.  We can't hardly manage now.  Next year they will probably raise taxes again.  Of course my pay will not raise accordingly.  So farther in the hole I go.
Apr 6, 2012 1:40PM
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We have the best government money can buy, big money pays for the elections and we pay for the incompetent people that are elected by less than 40% of eligible voters. Get out and vote. If elected officials were elected by 90%+ of eligible voters voting, they would have to do the peoples job. Cut government down to size.
Apr 6, 2012 8:22AM
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The part that gets me the most about all of this is, " put off any substantive changes until after Nov. 6 elections."  In other words they are not planning on doing what they know they should do; they are going to do what they want to do after their jobs are secured.
Apr 5, 2012 11:51PM
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First off, it's not right that Romney pays 14% taxes.  I'm a paid tax preparer on a side job.  It's not fair that A LOT OF PEOPLE don't pay federal or state income taxes.  I make good money because I planned ahead, worked hard, and earned a master's degree (after 6 years of school).  I paid $10,000 in taxes this year and got back $1100 ($1000 of it was a child tax credit).  I just filed a return for a guy who got back $10,000...too bad he paid $50,000 in federal taxes this year (well above what lots of people on here make that are complaining about how unfair the system ).  He's a 1%'er.  I can't tell you how many tax returns I've done where a low income family gets back $7-10,000 for making less than $30,000.  Where did that money come from?  Bingo:  the $9,000 I paid in but didn't back; that's where.  So, how is that I make the money and then have to give it to someone who didn't?  That's the argument for a flat tax and everyone pulling their weight.  I'm ok with low income earners getting help--give them their tax money back.  But don't give them more than they put in; and definitely don't accuse me of being arrogant or inconsiderate if I fight to keep the money that I sacrificed to be able to make.  Also, give the 1% a break...how would you like to make $200,000 and see $50,000 of it go away to taxes?  I see people everyday who pay $2000 (10% of the $20,000 they made) get extremely upset that they're not getting back more than $6000 they're getting back this year because they got the extra $800 tax gift last year.  Really, you're getting back triple what you paid in and you're ticked because it was $800 less than last year because a tax break wasn't extended!?!?!  What about the 1%'er who just lost $40,000.  And, by the way, in addition to the 25% he paid in taxes, he gave away 10% of his income to charity ($20,000).  Let's get real people...the system is broken at the top and the bottom brackets.   
Apr 6, 2012 9:20AM
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We really need in place of the IRS tax system, a national sales tax to take its' place. Then there is no doubt on what is paid in and you lose the need for the IRS, tax acct.,tax lawyers, etc. Couple that with a real bill that makes the Gov only able to spend what it has for money, and pull in our "World empire" status. We don't need to spend money in all of these foreign countries maintaining military bases. Every empire the world has ever seen has collapsed under its' own weight. We can take care of our country and our country ALONE.
Apr 6, 2012 12:14PM
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The incompetence and corruption in Washington is stifling and disturbingly monumental.  The founding fathers must be rolling in their graves over today's carreer politicians.
Apr 6, 2012 10:37AM
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Abolish the current Federal income tax system and implement the Fair Tax national sales tax now. It's about time! No more congressional tax games. It replaces the current 70,000+ pages of tax code with 120 pages that we can all understand. Congressional bills HR-25 and S-13 have been introduced and have 74 co-sponsors.  See fairtax . org to learn about it and let congress know you support it.

Apr 6, 2012 9:28AM
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...and another thing, the idea of passing tax cuts with an expiration date was just to save the politicians from having to vote to raise taxes some day.  If they want to change the tax rates (increase or decrease) they should have to vote to do it.    
Apr 6, 2012 8:17AM
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Those who advocate a "flat tax" need to understand that what they will get is "another tax". Government never lets go of a tax scheme....ever. Voters, however, are in control, but stunningly they don't exercise that control. Congress writes this distorted mess into law and we, including the IRS, do our best to put it into practice. Right now it's one giant obfuscated mess designed to benefit those who usually benefit. If your Congress person does not re invent this highly contorted tax system whereby you can report and pay your taxes easily and without confusion, vote him/her out of office and go to the next guy. And the next...and so on until these incredibly stupid people get the message on the tax issue. We're in a box now, having run up debt such that taxes are a certainty. Time to try some some common sense in getting a handle on our national fiscal condition. 
Apr 6, 2012 1:22PM
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We could fix this mess with one swipe of the pen. Force Washington to quit spending more money than they take in. In other words, live like the rest of us do. Quit using OUR money to buy votes so that you can get re-elected and collect your outrageous pensions and life long benefits. The job of politician was never meant to be a career. It was supposed to be public service. You work for us B*TCHES!


Apr 6, 2012 10:05AM
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National sales tax is the way to go.  Everyone pays - even the millions who earn their money in cash payments.
Apr 6, 2012 12:01PM
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Get ready to see your taxes skyrocket.  We are all going to pay through the nose to get this deficit down and it is going to hurt badly.  It won't matter unless the people in office stop the spending on wishful thinking. 
Apr 6, 2012 10:08AM
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Tim725, what is funny is that when Bush first introduced them, the Liberals cried that they were "tax cuts for the rich". Only after they themselves started to vote to extend them did they admit it cut taxes for EVERYONE including the poor who already pay little or no taxes. It is just amazing how the media and liberals lied back in 2001 and 2003, the 2004 election year, and all the way through the rest of his term. I wish the American people would hold politicians to a higher standard.
Apr 6, 2012 11:02AM
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The current tax system is broken, and besides, it's way too complicated...implement the Fair Tax system and all is fixed... and it needs to be "in place of" and not "in addition to" the current tax system....it's been proven the Fair Tax would fully fund all aspects of the gov, but polititions won't use it because it takes control of all taxpayer monies out of their hands...
Apr 6, 2012 3:08PM
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VOTE THE SLACKERS OUT AND PUT PEOPLE IN THERE THAT CARE ABOUT THE USA. ALSO WHEN THEY ARE VOTED OUT THEY LOSE ALL ACCRUED BENEFITS, SEE HOW MANY PEOPLE WOULD WANT THE JOB THEN. AT LEAST THEN WE COULD CULL THE PALM-GREASERS!!!!!!!!!!
Apr 6, 2012 11:56AM
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Our current system taxes the working successful American to death to pay for political crap and liberal ideas.  I'm not my brother's keeper.  Downsize the government...period!
Apr 6, 2012 10:50AM
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A flat tax is the only way to go. If congress does not pass a budget and have it signed by September 30 of each year they have to stay in session without pay until it is signed.
Apr 5, 2012 7:55PM
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Enough already!  Change has to happen.  A tax policy needs to be in place by the end of the year for the year 2013.  Are the politicians in Washington, public servants?  They are supposed to be.  So here is what I am going to look into.

 

Forcing our public servant politicians to do work.

We have a task: Put a tax policy together for 2013

We have employees today that can make decisions: Politicians

We have a president today: Obama (and I could care less whether I like this guy or not.  I also care less whether the local grocery store cart attendant becomes President in 2013.  Right now we have a issue and it needs solved now.)

Vacations: Denied, get this settled now

 

I am tired of paying these people to avoid topics of tomorrow that need solutions today.  It is April and the intelligent move is to table discussions until November.  It is our fault.  We are the ones voting these idiots into office.

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what the hell do we pay these clown for  ?? part of their job is to write tax laws . another is a budget and they haven't got one of those . we should refuse to pay them untill they do what we pay them to do . we would be fired if we worked like that bunch . throw ALL of them out come nov as they are the problem we have in this country .
Apr 5, 2012 8:26PM
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BTW  I am one of the bottom 50% and I do pay taxes, I make about 20,000 a year. Sales tax, property tax, gas taxes,etc. Everyone needs to pay their fair share in taxes, regardless of income, otherwise how would anything get done, but tax revenue needs to be used wisely, which is not being done. I don't have the answer and neither do the politicians, regardless of political party.
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