After many acknowledgements of a tough tax season, both from our side of the fence, investment tax reporting vendors, and CPA professional filing side, the IRS has also inferred that the new tax reporting was a bit tougher than expected for them as well. This recent notice (Notice 2012-34) by the IRS has delayed the third and more complicated phase of tax basis reporting until Jan 1, 2014.
As a refresher from our light-hearted Rockwell themed “Somebody is watching you” article, in Jan of 2011, the IRS has begun mandating various types of basis reporting by most vendors facilitating capital market transactions. This is a long overdue mandate in our minds as the technology for completing this is now readily available. The IRS has smartly phased this reporting in over several years with the more complicated types of transactions being last mandates.
While this is transparent for most individual filers and requires no action, thank goodness after the most recent reporting year (2011, filing date of April 2012) the IRS has smartly delayed the more complicated Phase III reporting until Jan 2014. Rather than continue to squash mandates into the reporting systems, letting vendors, tax, and investment professionals digest the most recent changes is a great idea in our minds.
We see this delay as a win win for filers and the IRS as the delayed year of more complicated transactions will most likely lead to greater accuracy and continued progress on reconciliation by both individuals and the IRS. (Less need for audits or tax notices, due to confusing, inaccurate reports.)
Well done Uncle Sam, good decision for all!
Have a Great Day!