Democrats, who say the Republican tax overhaul is mainly a giveaway to the wealthy, have warned that the new IRS guidelines could be skewed to give taxpayers an exaggerated benefit ahead of the elections that they would have to repay in 2019.
The Internal Revenue Service has estimated it may need almost half a billion dollars more over the next two years to implement the new tax law passed by Republicans and signed by President Trump just before Christmas, the agency's independent taxpayer advocate said Wednesday.
To ensure an accurate calculation, taxpayers will have to enter their personal financial information into a calculator expected to be unveiled next month on the website IRS.gov. The IRS doesn't expect that to change much under the new tax law given the preference filers have shown for getting big refunds, rather than just breaking even or having to cut a new check to Uncle Sam when they file their returns.
The IRS and Treasury Department on Thursday issued new guidance on tax withholdings from employees" paychecks, a key step in its implementation of the new tax law that President TrumpDonald John TrumpHouse Democrat slams Donald Trump Jr. for "serious case of amnesia' after testimony Skier Lindsey Vonn: I don't want to represent Trump at Olympics Poll: 4 in 10 Republicans think senior Trump advisers had improper dealings with Russia MORE signed last month.
Another reason additional funds are needed is that although the tax bill was originally promoted as a simplification of the code, new complications have been added in some cases, including exemptions for most refinancings of home mortgages and loans closed after December 15 that had prior binding purchase contracts.
The problem, however, is that the IRS generally does not know when a mortgage closes, the terms of a refinancing or the date of a purchase contract.
Whether the IRS gets additional funding remains a question.
Tax law implementation to cost IRS almost $500 million
That's on top of funding cuts that have already left the agency unable to keep up with many of its service demands, Nina Olson, the National Taxpayer Advocate, wrote in her office's annual report to Congress.
"'Shortcuts" have become the norm, and "shortcuts' are incompatible with high-quality tax administration", Ms. Olson wrote.
The report said that the agency's decision to assign some taxpayer accounts to private collection agencies in April 2017 cost $20 million to run, and collected $6.7 million in tax payments.
But that does not mean the IRS has a year to get up to speed.
The Internal Revenue Service released guidance for employers about how much tax they should withhold from workers' paychecks in 2018 - and said it would soon offer an online calculator employees can use to make sure the amounts are correct.
The new guidance will allow many taxpayers to start seeing bigger paychecks due to the new law. California, New York and New Jersey are among the states that have been considering changes to their tax codes to blunt the pain that their residents could feel from the scaling back of the state and local tax deduction in the new law.
He described the new withholdings calculator as "straightforward" and "user friendly".More news: Kia to unveil new K3 compact sedan at Detroit auto show
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