Why is IRS delaying refunds?
IRS or the Internal Revenue Service is an agency in the United States that collect income tax from the citizens and business establishments. Usually, the tax is paid annually and the tax would depend on the income. The higher the income, the higher the tax. There are also instances that the computed tax is higher than it should be. In this case, the tax is refunded to the resident or a business owner.
However, IRS announced that processing of tax returns will be delayed because of the passage of Tax Relief Act of 2010. Tax forms and other instructions will also be revised. Tax software will also be tested for release to the public. When these things are done, that is the time that IRS can start accepting tax returns for refund.
The 2011 tax changes need a lot of time for preparation since the system has to modify the tax code. This also means that refund will take a long time to be implemented. The Tax Relief Act of 2010 was just signed by President Obama on December 17, 2010 which was still passed by former president George Bush Jr.
This Act prepares the IRS to more calculations for higher tax rates. This already took effect on January 1, 2011. It will take a month after taxpayers can file tax returns. Those who will file the following tax returns will be affected by the changes: itemized deductions, tuition and fees deduction, casualties and thefts, and District of Columbia homebuyer credit. Those who are not affected can file their tax earlier than February.
The IRS has also encouraged taxpayers to use the electronic file to avoid further errors. Paper tax forms may be confusing because of the tax changes so to ensure correct tax returns, people should use the e-file instead.