Here are my predictions for what we can expect in the tax world in 2012: 

  1. Congress will extend the “2-month” payroll tax cut for the rest of the year. They will probably do this with much drama in the last few days of February.
  2. No tax reform will take place this year. It’s an election year so neither party will want to put forth anything that might rock the boat.
  3. Once the elections are over, Congress will execute its favorite play — the punt — by extending the “Bush Tax Cuts” for another year or two. This will probably happen, with much drama, right before Christmas.
  4. Most of the tax provisions that expire 12/31/11 (such as the AMT patch) will be extended along with the Bush Tax Cuts.
  5. Along with extending the Bush Tax Cuts and other tax provisions into 2013, Congress will either a) extend the payroll tax cut into 2013 or b) let the payroll tax cut expire but replace it with some other gimmick tax break.
  6. IRS efforts to regulate preparers will not have the desired effect, in 2012 or beyond. I think the result of this bureaucracy that is being created is that more burdens and annoyances will be placed on preparers, with no discernible benefit to consumers.*

*-Clarification to #6 based on reader feedback — I do think preparer regulation is good in theory. I just really question if the IRS can execute the oversight effectively. I’ll write more on this in a future blog post.

I’ll bring this post up again at this time next year to see how accurate my predictions were.

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