The inability of Congress to reach an agreement to avoid the "fiscal cliff" until the last minute continues to send ripples through the economy. The IRS announced Tuesday it will not begin processing 2012 tax returns until Jan. 30.
That means tax refunds for many won't be available until mid-February, said Joe Sharp, vice president of Total Income Tax, 1425 W. Forrest Hill Ave.
"That delay hurts people who need the refund the most. It's a big hit for people who come to depend on getting that money back from the government," he said.
Sharp said people can have their tax returns worked on now. "We can tell them what to expect, but returns won't be processed until January 30."
The IRS delay could have an impact on businesses, as well, said Sharp, who heads up Sharp Payroll, a division of the Total Income Tax business.
"We do payroll for about 100 small businesses in the area," he said.
Alan Willadsen, a certified public accountant with Heinold-Banwart in East Peoria, said the delay will mean some tax forms required for clients won't be available until late February or early March.
"That compresses an already tight filing season.
"There'll be a lot of last-minute printing and assembly for tax preparers," said Willadsen, who will take part in a tax update seminar at the Par-A-Dice Hotel on Thursday.
While acknowledging problems created by the federal government's last-minute moves, Willadsen said there also was relief that some stability has been restored to national tax policy.
"Those last couple of weeks in December were tough on us. We weren't able to help our clients plan," he said, referring to the fiscal cliff impasse that was finally resolved at the final hour.
Margaret "Peg" Gasow of Action Income Tax Service in Galesburg said her office normally has preliminary tax forms by Oct. 10.
This year, Gasow worries about the effect on an already shaky economy. "We are going to be pulling billions of dollars out of the economy in January and February," she said.
Maggie Hinderliter, owner of Rainbow Tax Service in Galesburg, said persons who file their income taxes early normally begin receiving refunds around Jan. 25-30.
"Now it will be closer to the 12th to 15th of February," Hinderliter said. "This cliff process slowed down this whole thing. I'm very, very disappointed with this."
According to the IRS, more than 120 million households can begin filing Jan. 30. A group that includes people claiming residential energy credits, depreciation of property or general business credits should be able to begin filing in late February and into March "because of the need for a more extensive form and processing system changes," according to an IRS news release.
Distributed by MCT Information Services
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