By Jeannine Aversa, AP Economics Writer
WASHINGTON (AP) — The year's end is always a frantic time for tax preparers. This year, it's more frenetic than usual.
The tax-cut bill that gained final approval in Congress onThursday, coming so late in the year, has whipped up a mild panic for accountants, payroll staffs and anyone else who handles taxes.
Payroll processors say the delay in new tax-withholding schedules means the wrong amounts may be taken out of many workers' paychecks in the first few weeks of January.
Accounting firms are rushing to advise clients, master the tax-code revisions and update software. Details have been in flux. And nerves on edge.
Jim Bolek, an executive at Basic Payrolls Plus in Grand Rapids, Mich., which processes paychecks at 400 companies, says the delay in the 2011 tax withholding tables is giving him heartburn.
"It's a huge headache," Bolek says. "Just sitting here waiting gives us a ton of stress. The longer we wait, the bigger the headache."
The bill will, among other things, extend income-tax cuts for two years; renew long-term unemployment aid; reduce workers' Social Security taxes in 2011; and let companies increase write-offs for capital investments next year.
The pace of activity inside accounting and payroll offices has intensified because the changes are coming so late in the year.
Yet there's only so much preparers can do as they await updated tax forms and software, and employers wait for the Internal Revenue Service to revise withholding tables. The new withholding tables will determine how much take-home pay ends up in paychecks starting next month.
It typically takes several weeks after Congress changes tax law for the IRS to send out new withholding tables. In most years, payroll processors and tax preparers say, they receive the IRS' withholding tables around mid-November.
"Normally, we would have those specs now," says Harry Buckley, chief executive officer of Jackson Hewitt Tax Service. "It's really coming down to the wire."