IRS Commissioner Douglas Schulman Warns Of Congressional Inaction On Taxes

WASHINGTON — IRS commissioner Douglas Shulman warned Thursday of a disastrous tax filing season next year if Congress puts off dealing with tax cuts that are set to expire at the end of the year or have already expired.

If Congress waits until the end of the year or acts retroactively on expired tax laws, "you could have a real disaster in the filing season where there is total confusion" about existing tax law, Shulman said at the National Press Club. He said one result could be that the tax agency, as it did last year, would have to delay the opening of filing for some taxpayers.

Shulman noted that the 2001 and 2003 George W. Bush tax cuts are set to expire at the end of this year, as is the payroll tax cut that was enacted last year and extended by President Barack Obama in February. The future of all those tax breaks is certain to be contentious as the fall elections near and as Congress approaches year-end votes on spending legislation.

Shulman said lawmakers also must decide on changes to the alternative minimum tax and determine what to do about several dozen already-expired tax breaks in such areas as research and development, ethanol, and schoolteachers who buy supplies for their classrooms.

"It is an issue we are tracking closely and we are quite concerned about and we are hopeful that these pieces of legislation will pass sooner rather than later," Shulman said.

Last year some taxpayers had to wait until mid-to-late February to file their returns because Congress made changes to the 2010 tax law in December and the IRS needed more time to reprogram its processing system.

Shulman also told reporters he planned to step down as commissioner when his term ends this autumn. He was nominated by Bush in late 2007.

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Comments

[JTHoffman]

11:01 AM on 04/09/2012

You will be missed Doug. All my friends think your good eye candy!

[Fodder-wing]

11:48 AM on 04/06/2012

Even its own IRS is chafing at the lack of real-world experience and knowledge exhibited by Congress. The results of living in La-La-Land year after year after year are once again demonstrated. Shameful.

[mcmutter]

09:32 AM on 04/06/2012

Bush tax cuts brought this country to its knees .....

But the ultra-rich were cheering all the way ....

[cty2cty]

06:08 PM on 04/07/2012

And what's your excuse for the Trillion dollar deficits we've had for the last three years and for the next decade or two? I'd say overspending and entitlements are what is going to bankrupt this country. Look, Obama has been President for over 3-years and has not heeded the Bowles-Simpson recommendations or any other advice to get our debt and deficits under control. The Dems had ultimate control of the White House, Senate and House for 2-years in 2009-2010 and did not take on any serious issues other than a $800 billion spend-a-thon, and the healthcare-for-all boondoggle PPACA. If taxes are as important to Dems and Libs as they say it is, then they should have pushed Obama to raise taxes long before now. But, all the Dems are worried about re-election, so, they just blow hot air and do nothing.

[F4flyr]

02:46 PM on 04/08/2012

cty...Bush43 gave Obama an eleven point four trillion dollar bill...with the resultant Great Recession, beginning late '07, bush just walked away....his conservative friends had gotten the economy where they wanted it...IN THE TOILET...and they're going to try to keep it there in the hopes that their 'candidate' can 'out-lie' the President...no nation has ever pulled out of recession without spending!...Obama had to keep the car companies and investment banks from going under...he did that, and is trying to keep the recovery going...repubs want him to fail in the hopes that their Clown Car Candidate will look the better choice...ANY MIDDLE CLASS VOTER WHO VOTES REPUBLICAN DESERVES EXACTLY WHAT THEY VOTED FOR...when they get done with their agenda of destroying the middle class, of making your 401K and IRA worthless, of stealing all the money you put into Social Security and Medicare, of bankrupting your company's pension plan, of repealing everything you have worked for, and you find yourself living in the basement of a relative, just remember my warning...YOU'RE GOING TO GET EXACTLY WHAT YOU VOTED FOR!!!...the wealthy don't give a rat's ass whether you live or die....FACT UP, PEOPLE!!!...

[clark8642]

09:29 AM on 04/06/2012

Once again Congress will feel it can wait until the last second to a) approve a 2013 budget b) approve a new debt ceiling c) approve spending cuts needed to avoid a sequester and d) take some sort of action on the Bush tax cuts and payroll tax cut. They do not have that kind of time. The military will start laying off thousands of troops in the next few months, months before Congress acts, to get on a glide path for the potential sequester cuts. Investors will need to evaluate their portfolios and take action soon to be prepared for inaction related to gridlock. For my part I hope the Bush tax cuts are allowed to expire for all of us so we quit redistributing our grandchildren's wealth. In any case it should be an interesting period and a rough start for whoever the next President is, Obama or Romney.

[Mary Bemenderfer Myers]

09:17 AM on 04/06/2012

Maybe they should all have a conference in Las Vegas for over $800,000 and discuss a plan to solve this problem. We taxpayers will foot the bill!

[mcmutter]

09:35 AM on 04/06/2012

as usual, you're a victim ....

maybe we should build another six useless aircraft carriers for $6.2 BILLION apiece and hire another 60,000 sailors to man em ....

[F4flyr]

11:33 PM on 04/08/2012

Mc...an aircraft carrier is hardly useless...it is the 'Big Kahona' when negotiating with other countries...I'm ex AF but I do admire those guys bobbing and weaving and planting 40 or 50,000 pounds of aluminum on a deck at night...ever notice what the Commander-in-Chief's first act is in a possible 'sensitive' situation?...yup...the closest carrier is fired up and steams into position...90 supersonic fighter-bombers loaded to the gills can be airborn in a matter of minutes...we make sure ALL parties are aware of the situation.

[Tye Poole]

09:11 AM on 04/06/2012

Funny Funny Funny ! They are just now discovering the Tax Codes are confusing !!! What a friggen joke !

[balugablue21]

08:57 AM on 04/06/2012

the only problem is that the tax we pay is a worthless tribute to the national debt, as the real money (gold) is given to the IMF instead of the worthless dollar. it's not our debt it's theIRS

[ThinkinPerson]

08:55 AM on 04/06/2012

Gee, I thought he was going to talk about the fact that 'pass thru' schemes have eroded the tax base further, bringing corporate and business tax from 6% of GDP to 1%. Oh well, thanks for worrying about a delay to February - what, aren't they getting their tax returns fast enough?

[tgrade1]

08:48 AM on 04/06/2012

Tax, tax, tax...why is it always about taxing, yet if someone talks about real cuts in spending, what they are talking about is "draconian." Can't taxes become "draconian" as well, especially when they are being called for to balance a budget which is out of control due to a seriously bloated government? Here's an idea--let's balance the budget through a combination of cuts and taxes, creating an environment where everyone pays their fair share? http://realsolutionsfortoday.blogspot.com/2011/06/help-balance-scales.html

[nyjjc]

02:18 PM on 04/07/2012

Taxes are only 38% of their maximum rate ever, judging by marginal income tax rates. To complain at this point that you're still overtaxed in any way, shape, or form is ludicrous and ignores the reality of the situation.

No liberal takes issue with spending cuts. The difference between liberals and conservatives is that we disagree where those cuts should come from. That is by and large far different than your claims that liberals refuse to cut. However, unlike liberals, conservatives can't seem to see the forest for the trees on taxes and seem to think that you can resolve all our issues with only spending cuts, and that's not the case - revenues must be raised as well as spending cuts. Collecting 14% of GDP in revenues simply does not cut the mustard.

[PrairieCal]

08:12 AM on 04/06/2012

This is nothing compared to the confusion, humongous paper work, and inefficiency that will result when the requirement that businesses file 1099's for every vendor they pay. This will let the feds track every business transaction in the country. It will also bring the IRS to their knees because there aren't enough people to track this stuff. Ah, congress in it's wisdom.

[F4flyr]

07:14 PM on 04/09/2012

Cal...the 21st century Revenue collectors are more and more on top of the cheaters...'this will let the feds track every business transaction in the country'?...um...I think that's exactly what they're supposed to do, isn't it?...maybe you and I will have to shell out less to cover the cheaters...'it will bring the IRS to their knees'?...main frame computers these days can handle the load, trust me...and I don't want to hear any crap about 'Big Brother' either...the sooner they can uncover all the OFFSHORE ACCOUNTS of our Republican 'Businessmen', the sooner our taxes can go down...can you imagine that?...on top of the tax cuts for the middle class he's gotten so far, President Obama can cut another notch in his belt for CONTINUING HIS PROMISE of 'everybody pays their fair share'...time to get up here into the 21st century, pilgrim...if it isn't clear to you by now what the real agenda of the conservatives is...i.e. Obama gone followed closely by the middle class, then you deserve what you vote for...and you're not going to like it, I promise.

[4Hilrbrt]

07:58 AM on 04/06/2012

Obama's solution....hire another 200,000 IRS workers regardless of qualification to add to the confusion.....

[marine1942]

08:13 AM on 04/06/2012

That is Obama's answer to the economic problem: just keep on spending.
We are broke
Obama did it
Obama is happy

[WINHIG]

08:53 AM on 04/06/2012

Bush did it.............WAKE UP !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[sfbanak]

08:53 AM on 04/06/2012

Bush did it, as did other pres's congress. It's ben building for years.

[JanC86]

10:08 AM on 04/06/2012

Stupid post.

[harkone75]

07:53 AM on 04/06/2012

Don't you just hate it when the IRS might have a problem

[sfbanak]

08:54 AM on 04/06/2012

When it trickles down to allcitizns having a problm, yes.

[ohiopositive]

07:33 AM on 04/06/2012

Makes sense that it will be confusing allright. There was a really good special on (I think HLN) last night about tax cheaters. Really fascinating. I'm sure they'll play it again. Check it out.

[Odyssey51]

07:16 AM on 04/06/2012

Nice to know the IRS is having problems these days. May they continue into perpetuity.

[sfbanak]

08:56 AM on 04/06/2012

Don't you thnk that will translate into individuaks having problms, like in the bginning of this year? We are still having $$ deducted, yes?

[Odyssey51]

10:04 AM on 04/06/2012

Sure but look on the bright side, for ONCE the IRS may be confused and ill-advised on how to proceed by Congress, ha ha. Bite on that IRS while we go behind your back and find new loopholes to get around your oppressive system.

[qsfoxx]

06:21 AM on 04/06/2012

Congress needs to pass a graduated capital gains tax based on the aggregate amount of the gains in one year plus the length of time the capital asset was held. For example, gains in excess of $1 million dollars on assets held for less than two years should be hit with a 50 - 65% tax rate.

[stuart100s]

06:48 AM on 04/06/2012

That will put a quick halt to any new start ups. We need to punish the risk takers and make sure that all new inovation occurs in other countries. It is important to share our wealth with the 3rd world countries and this would be fair to the rest of the world to share in our success. We have been on top too long and it has made us arrogant.

[qsfoxx]

07:23 AM on 04/06/2012

Nonsense. Risk is an everyday fact of life, and the fat cats need to pay their fair share of the burden. You only pay the capital gains taxes IF you sell. Successful business entrepreneurs can still reap the rewards through salary and dividends, which could increase as their ventures grow.

Based on your comment, I can only conclude that it is quite acceptable to "punish" the middle class taxpayers, who shoulder a greater percentage of the aggregate tax burden.

[uncloose1]

07:28 AM on 04/06/2012

I don't understand capital gains. It's like getting robbed twice. You paid taxes on it the first time you earned the money, and next you get taxed for being smart with it an earning a profit, on money that 's already been taxed once.
As for sharing, I'm not responsible for giving my money to the lazy and those with no initiative. I already do that in the U.S., it's called welfare.

[kathy smelser]

08:38 AM on 04/06/2012

there is a big difference between what Congress needs to do and what Congress will or might do ...if history serves us right it will be a mess and they will drag their feet all the way till the 11th hour ...they will play the blame game ..

[sfbanak]

09:00 AM on 04/06/2012

exactly. they like to play games. bad games. we see it at the end of every session. it will probably be bad no matter who "wins" we really need maturity & wisdom & consensus & true compromise. everyone can't have their way any time. but, many people can for the best for all. the corruption leads to those with the most money ruling. sad, but, true.