IRS Cancels Postcard-Sized Income Tax Return
Friday, August 2, 2019
The IRS won’t be getting any postcards from taxpayers this year.
It’s not like the nation’s tax collection agency was expecting pictures of scenic views of mountains and oceans or tourist attractions. But plans to provide taxpayers with a postcard-sized Form 1040 have been officially scrapped. The IRS is now working on a version that‘s shorter than the traditional 1040, but looks more like the typical tax returnyou’re used to.
Proponents of tax simplification have bandied about the idea for a postcard-type 1040 for years. It came closer to fruition when the massive Tax Cuts and Jobs Act (TCJA) was enacted at the end of 2017. Supporters of the legislation, including the Trump administration, bragged that taxpayers would be able to file a return on a single small sheet of paper. Despite the TCJA changes, however, the IRS still requires more information than what can be entered on just a few lines.
After the 2018 tax filing season—the first year most of the TCJA provisions affecting individuals went into effect—the IRS rolled out a prototype replacing old forms 1040, 1040A and 1040EZ. It wasn’t quite the size of a postcard but it was definitely shorter than those other forms. Yet it didn’t really cut down on the paperwork.
In fact, the new version required taxpayers to complete six additional forms and schedules that would have to be inserted into an envelope. This could lead to additional complexity and confusion and, ultimately, more errors. What’s more, the vast majority of taxpayers now file returns electronically, reducing the need for a postcard-sized 1040.
Taking its cue from the tax community, which generally objected to the prototype as being wasteful and inefficient, the IRS has announced that is abandoning its earlier effort and working on a new version that more closely resembles the traditional 1040. Some members of Congress doubted the viability of a postcard in the first place.
"Form changes are, for the most part, transparent to the vast majority of taxpayers because they file electronically. So far this year over 131 million taxpayers chose e-file," said Bruce I. Friedland, IRS spokesman. "The IRS makes changes to tax forms every year. The IRS has proposed minor changes to the draft 2019 Form 1040, U.S. Individual Income Tax Return, and will continue to work with the tax community to finalize the form over the summer, so it can be used for 2019 tax returns filed in 2020. Based on feedback from both taxpayers and the tax community, some minor changes were made to the form, which continues to be less than 2 pages, and the supplemental schedules were reduced from six to three. The changes make it even easier for taxpayers to file their returns. The tax form continues to be shorter than the 2017 Form 1040."
The IRS is accepting public commentary on the new 1040 until August 15. It expects to have a final form in place by November.
"We never believed that it would be a postcard. Never. Not for a moment," House Ways & Means Committee Chairman Richard Neal (D-MA) told Bloomberg News. "I heard that over and over again during my time and career and I think that makes more for a good photograph than it does for a good policy.”
By Ken Berry for CPA Practice Advisor