LATE FILING OF 2018 TAX RETURNS LIKELY!
As a result of the new tax law passed by Congress in late 2017 affecting the 2018 tax filing year, the Internal Revenue Service (IRS) has been working on updating and revising the tax forms. Unfortunately, this has taken considerably more time than hoped. Many of the forms needed to prepare the 2018 tax returns are not yet completed. As a result, the tax software to process the returns has been delayed. The government shutdown will also affect the filing season. The shutdown will stall the creation/revision of the aforementioned forms. Depending on how long the shutdown lasts there could be significant delays in processing tax returns. Taxpayers will not be able to prepare their 2018 tax returns until these tax forms are finalized by the IRS and the tax software firms have been able to update their software.
In addition to the delay in the federal forms process, the states have not finalized their tax changes with regard to the new federal tax law. For instance, Virginia is a conforming state, meaning that it generally conforms to the federal tax law. However, the decision to conform is an annual process and must be passed by the Virginia legislature. In “normal” years the vote for conformity is not easy. In this year of change, it will most likely involve more time on the legislature’s part to determine how or if Virginia will conform to the federal law. The interesting tidbit here is that unlike many changes in the past, absent any changes to the VA tax law, the new tax law will result in a larger VA tax liability in most cases than in the past. Interestingly, this means more money in the VA tax coffers…. what will VA do? Do we smell a lower tax rate? We can dream – right?!
Bottom line – there is a high likelihood that the preparation of your 2018 tax returns will be delayed and may not be able to be filed on time. This will mean that we may need to extend your tax returns. We will do everything we can to avoid filing extensions; however, we want to give you a heads-up that an extension may be necessary.
If you have any question, please feel free to contact us at email@example.com or 703-591-5200.