2019 Filing Season Risks Facing Delayed Start

The new Tax Cuts and Jobs Act (the “Act”) brought significant tax code changes to both individuals and businesses and to tax-exempt organizations. In an effort to evaluate how the IRS’ information technology organization has been dealing with the various changes, an audit was initiated by the Treasury Inspector General for Tax Administration (TIGTA). The findings? There is increased risk of a delayed start to the 2019 tax-filing season. Reasons point to the obvious: significant changes in the tax code, shortened delivery cycles and many missed deadlines.

In implementing the new Act, President Trump signed the Consolidated Appropriations Act, granting the IRS $320 million, $291 million of which was earmarked for information technology and ancillary operations support work. The TIGTA audit also estimated that it would take more than 1.1 million labor hours (or 542 full-time equivalents) to implement the new tax provisions, but as of June 2018, the IRS had only 117 current and new employees on hand to meet the changes. The IRS IT organization had planned to identify any potential negative impact on existing programs and projects brought about by the implementation of the Act, but as of July 16, no documentation had been provided.

The standard deadline for IT products and services for the next filing season is January 31. With implementation of the Act, several short-term deadlines were effected to simplify execution of the Act’s tax provisions. Unfortunately, those deadlines were missed, necessitating a new deadline of June 1 for submitting final work request notifications, set by the IT organization. This deadline change effectively shortened the timeframe for making system changes for the 2019 filing season by four months, but as the TIGTA audit notes, that deadline was also missed.

In response to the TIGTA report, IRS CIO S. Gina Garza had the following response:

“The IRS has created new forms and governance structures to increase communication, collaboration and alignment across critical IT stakeholders and implement tax reform changes, including an Executive Oversight Team comprised of IT leaders. The IRS has also secured adequate funding and hiring flexibility for tax reform implementation, and proactively addresses outstanding resource gaps.”

It’s been more than 30 years since the last major tax reform act and it’s estimated that implementation of the new Act will require creating or revising more than 450 forms, publications and instructions, and modifying over 140 IT systems. With all the tax law changes and the missed guidance deadlines, a delayed start to the 2019 filing season is all but guaranteed. Strap on your helmet; this filing season is going to be a bumpy ride.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2022 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
UPDATE: Inflation Reduction Act – Final Senate Version Eliminates the Change in Carried Interest Rules
Inflation Reduction Act – Tax Provisions Included in Proposed Legislation
Is your Venmo transaction reportable? - IRS intensifies 1099-K reporting requirements for Third-Party Network Transactions
What is the FICA Tip Credit and How Can Employers Take Advantage of It?
Deferring Gain on Sale of Vacation Property
Some Things You Probably Aren’t Thinking About as a Dealer When It Comes to the Rise in Interest Rates
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.