Filing season ends with no red flags

The IRS processed more than 128 million returns and issued some 97 million refunds without hitting any major roadblocks by the end of the filing season. As in past years, the vast majority of returns were filed electronically. Likewise, most refunds were deposited electronically. Although the filing season has ended for most individuals, millions are on extensions.

Returns

The IRS always expects a rush of last-minute filers and this filing season was no exception. A few days before April 18, the IRS reported that it expected to receive some 17 million returns before the filing deadline. Overall, the IRS received approximately 135 million returns during the filing season. This reflects a decrease of roughly one percent compared to the same time last year. Millions more will be filed by October 16, 2017, when taxpayers on extensions must file their returns.

The IRS predicted that some 12 million taxpayers would request extensions of time to file their 2016 returns. The IRS reminded taxpayers that an extension of time to file is not an extension of time to pay any tax due. Penalties and interest accrue on unfiled returns if taxes are not paid by April 18. There is no penalty for filing a late return after the tax deadline if the taxpayer receives a refund.

Refunds

By the end of the filing season, the IRS reported it had issued some 97 million refunds. The average refund is $2,763, compared to $2,711 at this time last year, the agency reported.

Some early filers experienced delayed refunds this year. A law passed in late 2015 took effect for the first time this filing season. The Protecting Americans from Tax Hikes Act (PATH Act) generally required the IRS to hold refunds on earned income tax credit (EITC) and additional child tax credit (ACTC) returns until February 15. After February 15, the IRS released these refunds.

Cybercrime

Tax-related identity theft surges during the filing season. Although the IRS has not yet released any figures, the agency has claimed to have done a better job curbing cybercrime. The IRS has partnered with the tax preparation industry and tax professionals to enhance e-filing security and safeguards. Many of these measures are behind the scenes.

One online tool was compromised by cybercriminals. The IRS took the Data Retrieval Tool (DRT) offline in March. The DRT is used by individuals completing the Free Application for Federal Student Aid (FAFSA). The IRS has reported that the DRT will remain offline until security features are improved.

Looking ahead

IRS Commissioner John Koskinen is in the last year of his five-year term. Koskinen has said that he hopes to complete his term, which ends in November, but recognized that he serves at the pleasure of the President. Speaking in Washington, D.C. in April, Koskinen recommended that Congress quickly approve his successor to ensure the smooth running of the agency.

If you have any questions about the filing season, please contact our office.

Written by

Steve Moss, CPA is a partner at Holden Moss CPAs and loves helping businesses and their owners grow to be the very best they can be. Our other offices include Raleigh, Oxford and Warrenton. We are a little different at Holden Moss CPAs. While we still provide traditional tax and accounting services, years ago we realized many clients wanted help in running their businesses and were hungry for ideas, solutions, strategy, and execution. In response, we expanded our skill set and joined Ran One, a global network of business consulting firms. Our membership with Ran One gives us access to proprietary resources and analytical software to help our clients grow, become more profitable and valuable, and have the lifestyle they desire. Now, blended into the fabric of our normal tax and accounting needs, we are focused on our clients’ businesses in a very different way. While our approach is not right for everyone, for those whom it is, incredible results may be obtained. Whether you have a new, or established, business, or for those in transition of selling or retiring, or for those who simply need to develop an exit strategy or succession plan, our unique approach to client service may be the edge you need.

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