The Internal Revenue Service has warned of tax season chaos if Congress fails to pass a series of breaks by the end of November. The so-called tax extenders include everything from deductions for school teachers who buy classroom supplies to faster depreciation for business equipmentent.
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The IRS has a warning for Congress. Unless it acts in the next few weeks, tax filing season could be delayed and so too would be the refunds expected by more than a hundred million taxpayers. At issue here are several dozen tax credits and deductions that affect everyone from teachers to businesses to racehorse owners. NPR's Brian Naylor explains.
BRIAN NAYLOR, BYLINE: The tax provisions expired at the end of last year. And unless they're renewed soon, the IRS warns of severe disruptions come tax filing time. Take, for instance, a $250 deduction teachers are allowed for buying their own supplies. Brianna Crowley is an English teacher at Hershey High School in Hershey, Pennsylvania. She says that deduction helps her help her students.
BRIANNA CROWLEY: I find that over the summer or over breaks when I'm reading books that I think my students will love, I buy a copy for them. I also spend my money on sometimes technology tools. For instance, I was able to use some iPads that our school had purchased, but as I was using them, my students were getting frustrated with the ability to write on the screen. So I ended up ordering stylus pens.
NAYLOR: Crowley says her husband is also a teacher and so losing a total $500 deduction would take a toll. The deduction, she says, also sends a message that validates teachers' efforts.
CROWLEY: That teachers are going out of their way and above and beyond to provide resources and access for their students that perhaps the school district is unable to or for whatever reason isn't willing to provide.
NAYLOR: There are lots of other people who would be affected if Congress doesn't act - homeowners who deduct the cost of mortgage insurance and those who install more energy-efficient furnaces and windows, businesses that get research and experimentation tax credits, coal mining companies that install safety equipment. Democratic Senator Ron Wyden of Oregon, the outgoing chairman of the Senate Finance Committee, warned his Senate colleagues some six months ago that failing to renew these provisions will hurt the economy.
SENATOR RON WYDEN: The jobs most essential to our economy- the good-paying, innovation driven jobs needed to underpin a growing middle class - they'll be harder to create.
NAYLOR: So what's standing in the way of Congress acting? Well, the House wants to permanently extend many of the business-related provisions. Congress has been temporarily renewing the measures because they can then claim a smaller federal budget deficit. The Senate Finance Committee, meanwhile, wants another temporary extension while it comes up with a much larger tax reform bill.
The IRS warns all of this uncertainty stresses the workflow at the agency, which has to write the tax forms and what it calls the tax community. Cindy Hockenberry is with the National Association of Tax Professionals, which represents the folks who do our taxes.
CINDY HOCKENBERRY: People want to get their tax returns filed as soon as possible so they can get their refunds as soon as possible because everybody knows the earlier you file, the quicker you get your money. Now, if the IRS delays the start of tax season, people won't be getting their refunds as quickly as they had hoped.
NAYLOR: It's not clear where this will end up, but there is a lot of pressure on lawmakers to do something and, Hockenberry says, soon.
HOCKENBERRY: The election is over. They've - you know, have said repeatedly that they weren't going to do anything until after the midterms. Well, now it's after so let's get to work.
NAYLOR: To which a lot of people involved in this issue would say, amen. Brian Naylor, NPR News, Washington. Transcript provided by NPR, Copyright NPR.