Check with your software and bank product provider to make sure you understand exactly how their programs will work this year.
Delray Beach, Florida (PRWEB) November 08, 2016
Due to the recently passed PATH Act, many taxpayers will experience longer than usual funding delays from the IRS. The PATH Act is federal legislation that prohibits the IRS from releasing refunds for taxpayers claiming Earned Income Tax Credit (EITC) and/or Additional Child Tax Credit (ACTC) prior to February 15, 2017. This is expected to affect more than 30 million taxpayers, and up to $100 billion in tax refunds.
Preparers are urged to file the returns as they normally would, and not wait to submit until the 15th. Most transmitters will be accepting returns as they are submitted, while some are planning to hold the returns in a queue until that date, then submitting a large batch. The best way to avoid issues this year is to educate incoming taxpayers and set realistic expectations about when taxpayers will be receiving their refund. Preparers are also warned against filing a return without the credit, then later submitting an amendment. Failure to comply can result in the inability to claim the credit in the future.
This year is expected to see a large increase in the election of refund transfer products, or bank products, specifically the recently reintroduced refund advance. These advances are not the same RAL’s of old, rather they are predetermined amounts that are provided at no cost to taxpayers. For many taxpayers, the tax refund is the largest payment they’ll receive all year, so the advance will provide them with a portion of that payment near the time of filing to help mitigate the increased wait times.
Ian Gardner, of Sigma Tax Pro, urges tax preparers to brace themselves. “Check with your software and bank product provider to make sure you understand exactly how their programs will work this year. They all provide valuable tools to make sure you are not negatively impacted by the new regulations, but it’s up to the preparers to be proactive.”
Taxpayers are not the only ones who will feel the effects of the delay, many preparers will also see a delay in the receipt of their preparation fees since many taxpayers elect to have their fees taken directly from the tax refund. To combat this issue, select refund transfer banks have developed programs to advance a percentage of preparers preparation fees at the time of e-filing. The advanced fees are then automatically repaid as funding is received from the IRS.
Sigma Tax Pro provides a full range of essential services for tax pros. This includes industry leading software solutions as well as technical support, tax preparation support and client retention strategies. Sigma Tax Pro specializes in helping tax preparation firms expand their businesses, open new offices and increase their client base.