IRS Said to Need Additional $1B to Implement New Tax Law

The IRS will release an online calculator by the end of February so taxpayers can ensure their paychecks are accurate

The new guidance will allow many taxpayers to start seeing bigger paychecks due to the new law. Employers will have until February 15 to incorporate the changes in their payroll systems.

The IRS will have to update its systems, publish new forms and publications, revise regulations, train employees on the new tax law and answer taxpayer questions about it.

New withholding tables needed to be issued in order to reflect the changes to tax rates, tax brackets, the elimination of personal exemptions and an increased standard deduction under the new law, passed by the GOP in December. Workers will see changes in their February paychecks once employers adopt the new guidance. As previously reported by FOX Business, employers using a big payroll processing firm may have an easier time with the transition, while employees at small businesses or other companies may have to wait a bit longer for the changes to be fully implemented.

As the IRS makes clear in their release, the new tables are created to produce the correct amount of tax withholding.

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"We have already seen confusion about withholding changes, confusion about the deductibility of prepaid property taxes, and confusion about whether states can allow taxpayers to make charitable contributions in lieu of taxes as a way of permitting their residents to claim larger tax deductions than would otherwise be allowed because of the new $10,000 cap on the state and local tax deduction", National Taxpayer Advocate Nina Olson said. "We've constructed the tables so that most people should be accurately withheld if they leave their W-4 in place", a senior IRS official noted.

Federal officials said that while the IRS will begin accepting both electronic and paper tax returns January 29, paper returns will begin processing later in mid-February as system updates continue in the aftermath of the recently approved federal tax bill. Mnuchin said the White House press briefing that Treasury and the IRS will release new W-4 forms for 2019 later in the year.

In the meantime, he urged filers who have complicated tax situations - i.e., anyone who is not single, childless and holding down just one job - to review the number of allowances they take on their W4s once the IRS puts out its new withholding calculator by the end of February.

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